Energy reform needed to encourage widespread EV adoption in the Golden State

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Experts worry that California’s electricity pricing approach could be a considerable barrier to consumers looking to switch to electric cars or appliances. 

Last year, we wrote about the challenges facing California as the state works to phase out gas-powered vehicles.  Without a doubt, we’ve been supportive of electric vehicle (EV) adoption, but with reservations.  We’ve made clear that this adoption has to occur in a way that makes sense for both consumers and the power grid. 

But does EV adoption currently make sense for all Californians? The answer, No!

Why? The Golden State already faces some of the highest electric power rates in the country. How high? In some parts of the state, consumers pay double the national average for electricity. Sadly this trend will only continue. California’s power prices will outpace inflation by 10%-20% over the next decade, primarily due to wildfire prevention investments. So it should come as no surprise if California’s already overburdened ratepayers aren’t interested in shelling out even more of their hard-earned dollars by plugging in an EV every night. 

Investor-owned utilities (IOUs) in California operate on a very different pricing schedule than most other U.S utilities.  They recover their fixed costs through increased per-kilowatt-hour rates. Environmentalists and energy efficiency advocates tend to advocate for this pricing type, reasoning that high electric rates will encourage people to reduce their usage. Of course, any time that prices go up for life’s necessities, it’s the poor who suffer the most. 

“Not only is that inefficient in that it’s going to discourage electrification, but it’s also really unfair because it’s disproportionately loading the costs of programs onto poor people,” says Severin Borenstein, faculty director of the UC Berkeley Haas School of Business’ Energy Institute.

This isn’t the first time Energy Fairness has discussed how California’s “green” mandates disproportionately affect its financially disadvantaged residents. In January, we expressed alarm about how its Energy Commission was laying the groundwork to institute a first in the U.S statewide ban on natural gas installations for heating and cooking. Why? Because as well-known California housing rights attorney Jennifer Hernandez recently noted in a podcast with Energy expert Robert Bryce, “…It’s much more efficient to use a gas stove or a gas heater at the consumer level and spend frankly, pennies to do what it would take dollars to do with electricity.”  Or, it’s simply not fair to impose an energy use tax to meet the goals of a green initiative on Californians who can least afford the burden.

Our position is clear; We support EV adoption on a wide-scale as one of the many tools to reduce carbon emissions. But let’s complete this adoption in an affordable way that doesn’t unduly burden California’s most economically disadvantaged or the most disadvantaged in any other state.