The electricity markets in the two most-populous states couldn’t be more different. The Communist California government heavily regulates electricity while Texas allows free market competition in most of the state.
Yet, Texas produced about five times the amount of wind power as did California in 2017 while it generated about 29 percent more non-hydroelectric renewable power (California’s strict renewable power rules excludes the power from large dams as being considered renewable), such as solar, biomass and geothermal than California while California’s retail electric rates were 89 percent higher than Texas’ in 2017, reports Forbes.
California’s electric market labors under detailed mandates imposed by busybody politicians exercising their power to save the world. Since 2002, there have been no fewer than 12 laws or state executive orders specifying renewable energy targets. Several other laws proscribe the power mix, such as sharply curtailing greenhouse gas emissions or prohibiting new coal-fired electricity contracts.
In return for all this regulation and government oversight, the big three publicly regulated utilities, Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric (owned by Sempra Energy), are granted a guaranteed rate of return that causes them to build new generating capacity without risk as well as make more profit with higher-priced electricity. With zero incentive to compete, California consumers lose out.
Unfortunately for the other 10 Western states fully or mostly within the Western Interconnect grid, their electricity markets and costs are beginning to be increasingly shaped by politicians in Sacramento and bureaucrats in San Francisco, whether they agree with them or not.
Since 2008, when California’s renewable electricity and greenhouse gas reduction policies really started to accelerate, the inflation-adjusted retail price of electricity has increased 13 percent in the state. The Western region saw its electrical prices rise 8 percent in tandem.
These increases don’t seem too high—until you factor in the fact that inflation-adjusted natural gas prices plummeted 70 percent from 2008 to 2017 in inflation-adjusted terms, thanks to widespread use of fracking in Texas and other states. Fuel accounts for about 40 percent of the cost of operating a typical natural gas electric generating plant and California generates about half of its power from natural gas.
It can only be the ham-fisted hand of government that could cause electric prices to rise by 13 percent when the primary fuel costs for electricity decline by 70 percent.
Mr Americana, Overpasses News Desk
May 15th, 2018