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I suppose like anything there are multiple reasons, but what are the top 3 why California electric rates are so high (compared to the rest of the U.S.)? https:
by floxy 1y ago
I suppose like anything there are multiple reasons, but what are the top 3 why California electric rates are so high (compared to the rest of the U.S.)?
https://www.chooseenergy.com/electricity-rates-by-state/ https://www.chooseenergy.com/electricity-rates-by-state/
Why doesn't the state encourage more capacity to bring costs down? (to encourage electrification/EVs, etc.) Is it because they are phasing out natural gas? Is it to encourage roof top solar? Or trying to reduce consumption by having high prices? Or environmental permitting? "Lobbying" by entrenched incumbents? Or maybe the high price is due to taxes and not the price of generation?
- neural_thing 1y agoIt's because the California government doesn't believe in markets, prices as incentives or anything like that. California govt believes in state mandates
- lern_too_spel 1y agoCalifornia famously deregulated its electricity market at the end of the 20th century, becoming the first state to do so. https://paylesspower.com/blog/deregulated-energy-states/ https://paylesspower.com/blog/deregulated-energy-states/ https://en.wikipedia.org/wiki/2000%E2%80%932001_California_electricity_crisis https://en.wikipedia.org/wiki/2000%E2%80%932001_California_e...
- ryan93 1y agoWow no regulations in California. First I’m hearing of this
- ryan93 1y agoWow no regulations in California. First I’m hearing of this
- chermi 1y agoYou understand there are multiple types of regulation, right? The deregulation you're referring to was with respect to generators being able to sell into the grid. The relevant regulation here is the state-backed guarantees on returns for pge under authority of CPUC. CPUC approves basically any rate increases pge approves. It doesn't need to do this. It could hold pge accountable based on what they determine qualifies as operating expenses vs. infrastructure improvements. PGE wants everything to count as infrastructure improvement because they're guaranteed a rate of return on infrastructure projects. Obviously it's difficult to determine what "infrastructure improvements" were actually due to poor management and maintenance vs. what infrastructure improvements are required purely to meet demand (for example) or from "normal wear and tear". It's hard to reconcile 1) the fact that there's pretty broad consensus that PGE fucked up and didn't fulfill its obligations, especially maintenance and 2) reporting record profits. Clearly there's something wrong with the system, particularly the CPUC-utility relationship. AKA, regulation.
- lern_too_spel 1y agoI understand that. I'm simply stating that GGP's assertion that California "doesn't believe in markets" is at odds with the reality that Pete Wilson signed a law that made California the very first state with an electricity market.
- chermi 1y agoI see, apologies if I was too aggressive in my reply.
- selfselfgo 1y agoAnd there’s no richer state in the union.
- brettermeier 1y agoNot believing in "free" markets but in state mandates would lead to stable prices.
- ViewTrick1002 1y agoThe average wholesale prices in California is nothing special. The costs come from the wildfires and a derelict grid requiring large infrastructure upgrades.
- olalonde 1y agoI can see a derelict grid and wildfires increasing power outages but how does it increase the cost of electricity itself?
- ViewTrick1002 1y agoThose costs include grid fees? Grid fees pay for damage caused by wildfires.
- deleted 1y ago[deleted]
- cryptonector 1y agoThat's all? California has the economic might to not have that problem.
- epistasis 1y agoI'm not sure excatly what you mean by "that problem," but economic might means having the ability to maintain massive infrastructure in sparsely populated, difficult terrain. It means paying massive amounts of money to inspect, clear brush, and replace 100 year old equipment piecemeal. Additionally, that economic might means that we have very high labor costs, and the ways of fixing things that are cheapest may be different for California than other parts of the country. But the utility is incentivized to spend as much as possible on these efforts (they take a fixed percentage of costs as profit), and the regulators have no clue what's going on. So proposing a method that's the cheapest elsewhere will get a rubber stamp.
- ruined 1y agocalifornia electric rates are so high because the state board keeps raising them https://www.ewg.org/news-insights/statement/2025/02/pge-record-2024-profits-highlight-cpuc-failure-protect-ratepayers https://www.ewg.org/news-insights/statement/2025/02/pge-reco... PR staff will talk about the insurance liability and mandated action to improve infrastructure (wildfires keep starting on power lines and then burning down cities) but it's hard to look away from the record profits
- chermi 1y agoPG&E is guaranteed a rate of return, meaning its profit margin is basically state-guaranteed. A large share of blame falls on CPUC and the structuring of the utilities. CPUC must decide whether they approve of rate before pge implements them, and I think it almost always does. I'm by no means excusing pge, they were pretty clearly negligent and failed to meet their obligations. But it's a state-backed operation, which pretty much always means less punishment for failure to operate effectively.
- Aloisius 1y agoSpending more money on infrastructure means profits will increase. There's not really any way around that. Capital expenditures are profit.
- cryptonector 1y agoWell, no, capital expenditures can create future profit. Emphasis on _can_ and _future_.
- Aloisius 1y agoNo. Capital expenditures are profit (or really, count towards earnings). They're long-term investments in fixed assets, not expenses that get subtracted out when calculating net income. You're just swapping cash with assets of equivalent value, so profits don't change. I'm not sure how PG&E would possibly not increase their profits if they got a rate increase meant to cover infrastructure investments. If they spend 100% of that increased revenue on infrastructure, then 100% of that counts towards profit - not in the future - immediately.
- outside1234 1y agoIf anything the renewable sources are keeping rates in check. California is raising rates to build out infrastructure for electrification and mitigation of the dangers that now exist due to climate change.
- guywithahat 1y agoIt's largely forest fires and regulation. Electricity prices are regulated by the state, and at the same time they mandate certain green energy goals. To hit these goals, electric companies have to ignore infrastructure to build renewable energy sources. If the infrastructure gets too old, it risks starting a fire, which could cost the company billions. When the state sees them lose money after a fire, the state lets them raise prices. It is a very silly cycle which could be ended by either removing green energy goals so they could improve infrastructure, and to not hold electric companies directly liable for all damage from a fire.
- JumpCrisscross 1y ago> It's largely forest fires and regulation It’s PG&E and regulatory capture. Santa Clara County is off PG&E and has normal energy tariffs.