Anyone who really thinks that the state’s Democratic legislative majority has a clue about how to lead California out of a devastating recession and out of an ongoing state budget crisis, should have paid attention to the Legislature’s action Tuesday. Lawmakers gave final approval to a bill mandating that utilities purchase a third of their electricity from renewable sources, such as solar and wind power, by 2020, a significant increase from the current mandate of 20 percent renewable. Next stop is Gov. Jerry Brown, who has not taken a position on the bill but has strongly supported its goals.
In essence, the state’s leaders have imposed a severe energy tax on California businesses and consumers, and even increased costs to one of California’s biggest energy users – a state government that already is awash in red ink. “Fossil fuels are finite, and demand for energy is growing,” said the bill’s sponsor, Sen. Joe Simitian, D-Palo Alto, according to published reports. If so, then wouldn’t the market mandate an eventual switch to renewables?
It’s hard to understand how imposing this mandate will do anything other than impose additional burdens on Californians at a time of record-level unemployment and just as increasing numbers of businesses are fleeing the high costs and regulatory burdens here. Democrats pitched the legislation as a job-creation measure, as if government can create jobs by edict. Whatever jobs are gained in the supposedly burgeoning alternative-energy world will easily be offset by lost jobs in most other sectors of the economy.
A California Air Resources Board study finds that average retail electricity rates will increase by 19 percent over those under the current 20 percent mandate for Pacific Gas and Electric customers, which means a total increase of 44 percent from 2008-20. Southern California Edison users will face an increase of 15 percent and 34 percent respectively, while Los Angeles Department of Water and Power customers face hikes of 26 percent over the current mandate and will face 74 percent retail rate increases by 2020, when the new edicts go into effect.
By the way, those are average rate increases. Because the state so heavily subsidizes the rates of lower-income Californians, the bulk of the hikes will fall on the middle class. And Californians already pay electricity rates more than a third higher than the national average. Even a more conservative estimate puts estimated average increases at above 7 percent.
Yet state officials are so zealous in their support for alternative energy mandates that they actually believe that the new government-created green jobs economy will make up for all hardship these increases will impose on everyone else. Critics rightly question where the money will come from to pay for the tens of billions of dollars in new capital projects that will be necessary to achieve these goals.
The legislation is filled with costly provisions, including one mandating that alternative energy producers pay union wages, which will only make the mandates that much more difficult to achieve. The bill also requires that most of the energy be generated by California producers. The legislation expands the size of the state bureaucracy and adds more rules and regulations on an industry desperately in need of the imposition of more market forces.
Unfortunately, this is the California approach, and it is a wrong and wrongheaded direction. Gov. Brown should veto this bill.