Green policies force California utility to raise rates

California regulators authorized San Diego utilities last week to collect billions of dollars which will go toward costs associated with the state’s environmental and energy policies.

E&E News reports that the San Diego Gas & Electric Co. got permission to raise $1.73 billion over three years, which will hike power bills an average of 12.2 percent and cost the average customer an extra $9.95 per month. Its sister company, Southern California Gas Co. will also seek to raise $1.95 billion, increasing power bills an average of 9.6 percent — or $3.55 per month.

The state of California requires that large utilities get one-third of their power from renewable energy sources by 2020 — one of the most aggressive renewable energy mandates in the country. According to E&E, SDG&E gets about 20 percent of its power from renewable sources.

“Due to the growing use of photovoltaic generation in SDG&E’s service territory, and the impact of this on SDG&E’s electric operations, it is reasonable to authorize some funding for the energy storage projects that are already underway,” said the California Public Utilities Commission.

However, the state’s renewable energy policies were expected to raise rates. In 2009, the CPUC reported that the 33 percent mandate was “highly ambitious, given the magnitude of the infrastructure build-out required.” The utility regulator estimated that it would cost “approximately $115 billion between now and 2020” to comply with the mandate.

Producing electricity from renewable energy sources is far more expensive than producing it from fossil fuels, like natural gas. In 2011, the Electric Power Research Institute found that producing one megawatt-hour of power in 2015 from natural gas would cost between $49 and $79. However, producing the same amount of power using onshore wind turbines would cost between $75 and $138, and using solar power would cost between $242 and $455.

The Energy Information Administration estimated that power from onshore wind turbines will cost $97 per megawatt hour by 2016, while natural gas will cost $63. Offshore wind power will cost even more — at $243 per megawatt hour — and solar power will cost $210 per megawatt hour.

“There is growing evidence that the costs may be too high — that the price tag for purchasing renewable energy, and for building new transmission lines to deliver it, may not only outweigh any environmental benefits but may also be detrimental to the economy, costing jobs rather than adding them,” writes the Manhattan Institute senior fellow Robert Bryce in a study from last year.

SDG&E is also allowed to collect $26,990 to cover the costs of electric vehicles that are tied into the grid. California mandates that 15.4 percent of the state’s vehicle fleet to be zero-emissions cars by 2025, meaning automakers selling in the state are required to produce an increasing amount of these vehicles.

“There is no dispute that electric vehicle chargers will add additional load, which is likely to result in SDG&E having to make improvements to its distribution system in order to meet this load,” the the CPUC said. “For those reasons, the funding request of $26,990 is reasonable.”

The San Diego area already has one of the highest numbers of electric cars in the state, with 820 Nissan Leafs in the SDG&E service area in 2011.

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