Breaking News! California Electricity Prices are High
http://www.theenergycollective.com/jamesbushnell/2399041/breaking-news-california-electricity-prices-highFebruary 22, 2017 by James Bushnell
In case you missed it, a recent investigative piece in the LA Times unearthed the shocking fact that California retail electricity prices are high, about 50% higher than the national average. The article’s main focus is on the fact that California has a lot more installed nameplate generation capacity then has historically been the norm. There are several causes identified in the piece. Deregulation of the market in the late 1990’s is pointed to as a culprit. Somewhat inconsistently, the construction of regulated, rate-based plants also takes much of the blame. One factor that was barely mentioned, however, was California’s renewable electricity policy.
The story of how California’s electric system got to its current state is indeed a long and gory one going back at least to the 1980’s. The system still suffers from some of the after effects of the 2000 era crisis. The Long Term Procurement Process (LTPP) put in place in the wake of the crisis, and overseen by the CPUC, has been criticized from many sides.
However, since the power crisis of the early 2000’s settled down, the dominant policy driver in the electricity sector has unquestionably been a focus on developing renewable sources of electricity generation. As is well known (outside of the LA Times apparently), California has one of the country’s most aggressive renewable portfolio standards (RPS). The RPS requires each firm that sells electricity to end-users to procure an increasing fraction (33% by 2020, 50% by 2030) of the energy they sell from renewable sources....
However comparing the cost of a brand-new solar plant to that of a brand-new gas plant overlooks two important facts. First, renewable, variable output sources offer very different operational capabilities than conventional sources. Second, right now we don’t really need new capacity of any kind, and are in fact struggling to find ways to compensate the generators that are already here....
