Gov. Gavin Newsom (D-CA) celebrated a one-time $75 credit on Californians’ electricity bills this week. He did not, however, note that the average California household pays $223 more for electricity each year than the average American household because of burdensome taxes and regulations he supports.
The credit comes from California’s cap-and-invest program, which requires businesses to pay for their greenhouse gas emissions. Democrats waste most of this revenue on boondoggles such as the state’s high-speed rail project, but a fraction of the money is returned to residential customers through credits on their utility bills. It’s a way of making voters think they’re getting something from the government when, in truth, they are being bilked.
The credits are drowned out by the highest energy prices in the continental United States. The average California household spends $160.86 a month on electricity, compared with the national average of $142.26.
And then there are gas prices. California also has the highest gasoline prices in the continental U.S., adding another $600 to household expenses above the national average. Both the electricity and gas spending figures account for the fact that Californians, on average, consume less electricity and gas than the average American household. No wonder so many families leave California.
The problem for the rest of the nation is that California’s high energy costs don’t stay in California. The gap between energy costs for California businesses and those elsewhere is greater than the gap for households. Commercial businesses in California pay 27 cents per kilowatt-hour, almost double the national average of 14 cents. Industrial users pay 21 cents per kilowatt-hour, more than double the national average of 9 cents.
Those costs follow the goods that California businesses sell and ship. A manufacturer using 1 million kilowatt-hours a year would pay roughly $116,000 more for electricity at California’s average industrial price. Warehouses, refrigerated storage facilities, and distributors face higher costs, too, while California’s expensive gasoline and diesel add to the cost of moving goods. Because the ports of Los Angeles and Long Beach handle nearly a third of the nation’s containerized international seaborne trade, higher costs at that gateway reach store shelves across the country.
The policies driving up energy costs in California are no secret. In addition to the carbon tax scheme, the state’s renewable electricity mandates, rooftop solar compensation rules, and energy efficiency programs all drive prices higher.
Then there are taxes. California’s Energy Commission estimates that cap-and-invest adds 23 cents to a gallon of gasoline, and the separate Low Carbon Fuel Standard adds 18 cents. California’s special cleaner-burning gasoline blend raises prices further. It also limits the number of suppliers able to replace fuel quickly when a California refinery shuts down.
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Meanwhile, environmental review and permitting processes impede oil drilling in a state with plenty of oil underground. Refiners face extensive emissions, reporting, and maintenance rules as the state moves away from petroleum. So while the rest of the nation is energy self-sufficient, California imports 61% of its oil from foreign countries.
Newsom’s $75 credit is hardly a reprieve from the costs his government inflicts on Californians and the rest of us every day. Compared with national averages, California families pay more to keep the lights on, businesses pass higher energy costs along to customers across the country, and the state depends on foreign nations for its energy supplies. The last thing America needs is a Californian in the White House implementing the state’s failed energy policies nationwide.