California Governor Jerry Brown has signed into law, an Act that gives the state of California 9 years within which to obtain a third of its energy from renewable sources. This is in keeping with former Governor Schwarzenegger’s 2008 executive order “requiring that California utilities reach the 33 percent renewables goal by 2020” (http://www.energy.ca.gov/renewables/). The question is, can California implement this law without breaking the bank?
2006 statistics from the California Manufacturers and Technology Association indicate that in 2006, CA had the eighth highest cost of electricity of all the states, after Hawaii (approximately double the cost of CA electricity), Massachusetts and New Hampshire, were almost a third more expensive than California. The lowest energy costs were roughly half that of California, in West Virginia and Idaho (Energy Index)
More recent statistics from the U.S. Energy Information Administration indicate that as of Dec 2010 the “Average Retail Price of Electricity to Ultimate Customers” in CA was 13.81 cents per kilowatthour. This makes the cost of energy in CA cheaper than Alaska and Hawaii (which arguably have their own infrastructure and transmission related issues driving up the cost), and also cheaper than Connecticut (17.39), Massachusetts (14.53) and New Hampshire (14.82) and only slightly cheaper than the District of Columbia at 13.75 cents per kilowatthour. On the low end are Wyoming, Washington and Idaho (6.2, 6.6, and 6.54) (http://www.eia.gov/cneaf/electricity/epm/table5_6_b.html).
Still, even if you look at commercial rates only, California, at 11.26 cents per kilowatthour still does not have rates that are “50% higher than in the rest of the country” as Joseph Vranich claims in his blog post Why do Companies Leave California? As of these statistics for December 2010, updated March 2011, the U.S. average is “9.81” cents per kilowatthour which makes California rates only 14% higher than the national average, or if you want to use the statistics of the cheapest state, in this case, Idaho, at 6.31, well yes, the rates are definitely more than 50% higher in California than they are in Idaho (Vranich).
Regardless of the exact or comparative numbers, the implementation of new renewable sources of energy will require an initial investment in infrastructure, and this comes at a time when state and federal funding is already tight. Energy law expert, Dian Grueneich, formerly Commissioner of the California Public Utilities Commission, believes that while energy efficiency may reduce energy emissions in accordance with the 2006 California Global Warming Solutions Act, implementation of the recent California Renewable Energy Resources Act may be slow given the current financial restrictions.
How do you think this will turn out? Will California lead the country and the world in achieving 33-40% renewable energy sources within the next 8 years, 8 months? Or will California bankrupt it residents and drive more businesses to Nevada (and other states) with unreasonable energy price hikes?
References
- Average Retail Price of Electricity to Ultimate Customers by End-Use Sector, by State, Electric Power Monthly with data for December 2010, Report Released: March 11, 2011, available at http://www.eia.gov/cneaf/electricity/epm/table5_6_b.html
- Bill Documents available at http://leginfo.ca.gov/cgi-bin/postquery?bill_number=sbx1_2&sess=CUR&house=B&author=simitian (retrieved 04/19/2011)
- California renewable energy gets major boost in new law, Los Angeles Times, April 12, 2011, http://latimesblogs.latimes.com/greenspace/2011/04/renewable-energy-rps-california-electricity-jerry-brown.html
- California Renewable Energy Overview and Programs available at http://www.energy.ca.gov/renewables/ (Last Modified: 04/15/11)
- David R. Baker, Brown signs law requiring 33% renewable energy, San Francisco Chronicle, April 12, 2011 available at http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/04/12/BUA91IVBDL.DTL
- Demos, Grace and Kelly McTigue, O’Melveny & Myers LLP, California enacts 33% renewable portfolio standard, Lexology, April 13 2011, http://www.lexology.com/library/detail.aspx?g=e3362dc3-afe7-4728-81f9-9b585162d22c
- Energy Index, California Manufacturers and Technology Association available at http://www.cmta.net/cost_index.php?order=cost_index_electricity&custom=1&cost_index_state=00&cost_index_year=2006§or=cost_index_electricity (retrieved 04/19/2011)
- Governor Brown Signs Legislation to Boost Renewable Energy available at http://gov.ca.gov/news.php?id=16974 (retrieved 04/19/2011)
- Palen, James, Experts talk law, clean energy policy at USD symposium, The Daily Transcript, Friday, April 15, 2011 http://www.sddt.com/Law/article.cfm?SourceCode=20110415czi
- Smith, Rebecca & Vauhini Vara, California to Jolt Renewable Power, The Wall Street Journal, http://online.wsj.com/article/SB10001424052748703518704576258663284381114.html
- Vranich, Joseph, Why do Companies Leave California? Here Are Ten Reasons (Updated), Revised April 2011, http://thebusinessrelocationcoach.blogspot.com/2011/04/why-do-companies-leave-california-here.html
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