California’s Crazy Justification for Expensive Electricity

by William Yeatman on November 12, 2011

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California’s environmentalist leadership is so desperate to go green that regulators will approve any renewable energy project with a high chance of being completed. Cost doesn’t matter. Nor must the project be necessary to meet the state’s renewable energy goals. The only criterion that counts is feasibility. If you can build it, state officials will approve it.

This is an outrageously low bar, yet it was the precedent set last week, when the California Public Utilities Commission, by a 4 to 1 vote, approved a 25-year contract for Pacific Gas and Electric to buy electricity generated by the Mojave Solar project, a 250-megawatt solar power plant that will soon break ground in San Bernardino County.

It is incontrovertible that the Mojave Solar contract is cost-ineffective, even with the cost reductions to ratepayers afforded by the project’s two major federal subsidies*. Both the PUC staff and the Division of Ratepayer Advocates opposed the project due to its “extremely high price (p 22)” relative to other renewable energy projects. In addition to being expensive, the project is needless. The PUC itself concluded that, “PG&E has not clearly demonstrated a need for the Mojave Solar PPA (p 24).” The solar power generated by the Mojave project wasn’t necessary to meet the state’s Renewable Electricity Standard, a green energy production quota that tops out at a third of total electricity use by 2020.

Despite conceding that the project is expensive and unnecessary, the PUC nonetheless lent its approval.  In order to square this circle, the PUC reasoned that this project was “highly viable,” whereas most contracts between renewable energy generators and utilities fall through. So, the project was deemed to be a worthwhile investment solely by virtue of its high probability of being finished.

According to Forbes, Commissioner Mike Florio, the lone dissenting vote, said that “The [contract] unnecessarily saddles ratepayers with extraordinary above-market costs–$1.25 billion” and that “We could probably get almost 500 megawatts of renewable energy for the price we’re paying for this 250 megawatts.”

If I were a PG&E customer, I’d be outraged. Of course, conventional energy would have been far cheaper. But even if you possess a knee-jerk aversion to fossil fuels, nuclear power, and hydropower (as many Californians do), the Mojave Solar project was an outlier  among renewable energy generators. Simply put, this will be some of costliest (if not the costliest) electricity in America, even after its price tag was reduced significantly by federal handouts. Worst of all, the project wasn’t necessary!

In other states, cost and necessity are fundamental to regulators’ determination whether a utility’s resource acquisition proposal is in the public interest. In California, however, these issues are ancillary to the project’s chances of being built. That’s crazy! Environmentalists love to claim that California energy policy is a beacon for the country to follow. To my eyes, it’s a warning to be avoided.

* Mojave Solar received both a $1.2 billion stimulus-funded loan guarantee (from the same Department of Energy office that gambled away $500 million on Solyndra) and a stimulus-funded investment tax credit that covers 30 percent of the construction costs. It double dipped.

sean the solar November 12, 2011 at 9:52 pm

It might be expensive but Its cheaper than the wars that we have to fight to get oil!
We are also destroying the earth burning coal and gas.

two points November 13, 2011 at 5:14 am

idiot

Alex November 13, 2011 at 10:03 am

Wars to get oil? Obummer has just stopped the oil pipeline from friendly Canada s0 that he can continue sending our boys to die in the oil-producing middle east dictatorships….stoopid

Jim November 21, 2011 at 10:11 am

Are you impaired?

Ted Gibbons November 12, 2011 at 10:02 pm

California where the women are women and so are half the men. They have not had an original thought since the 60’s. Celebrity is starting to be an anagram for misfit.

Chris F November 12, 2011 at 10:25 pm

Sean the solar, if indeed we are fighting wars for oil the rational way to fix that is to have realistic regulations that would allow oil exploration and recovery here in our own country. Your last statement about destroying our country by burning coal and gas is without merit and only an opinion, not based on solid and transparent science. Cheap energy is what got us to where we are right now in the US, prosperous, well fed and longer living than ever. To demonize coal and gas is to turn your back on everything good we’ve accomplished in the last century and a half. That line of thinking comes from a very small but vocal minority and we’re onto you and are exposing this Malthusian thinking every day and will continue to do so until your type is driven from the seats of all power throughout the country.

jim karlock November 12, 2011 at 10:36 pm

“”It might be expensive but Its cheaper than the wars that we have to fight to get oil!”
JK– We don’t have to fight any wars to get oil – all we have to do is have teh Feds allow domestic oil exploration & production.

“We are also destroying the earth burning coal and gas.”
JK–Please leave the Gore religion out of public policy discussions.

thanks
JK

Ron Kilmartin November 12, 2011 at 11:47 pm

A comment to “scan the solar:”. America does not need to fight wars to get oil (or coal). We just have to fight the tyrant in the White House.

Its expense is not just the billions in subsidy from the taxpayers and the billions more in rate increases to the users, it is another indicator to entrepreneurs that Californis is run by idiots who could not operate a successful lemonade stand without a subsidy. It is why the entrpreneurs keep moving out of the state with their jobs and why outsiders (except the solar fleecers) do not even consider coming here. To top it off, of course, since it has zero reliability, it requires 250 mw of installed reliable fossil power to even allow its use in the system. In other words, a 250 mw of solar reqires a tota of 500 mw of installed power. By the way it is loony to label solar as power; it is only unreliable energy with no real power value to the system. But this is nonsense rebuttal-speak to enviros. We should be speaking about the non-reality of the carbon dioxide canard which is driving this foolishness.
Think of balmy England of 1100-1350 and its Mediterranean climate induced by nature (not CO2 from SUVs or fossil power plants), when and where some of the finest wines of Europe were produced (Climate, Past, Present, and Future, H.H. Lamb, 1972 1976). No Anthro CO2!! and it was warmer (for hundreds of years) than the supposed warming of the 1990s (supposed, since the stats do not account for elimination of thousands of the Soviet cold wether stations, and the Sat data flat reject the warming malarky. This is where the discussion should be, not an the secondary level of solar plant construction when the very reason for it to be considered is founded ont on rock but in mid-air.

Chris F November 13, 2011 at 9:33 am

Sean the solar, if indeed we are fighting wars for oil then the logical action to take is to open up all our lands here to get what’s underfoot. As far as destroying our planet goes, fossil fuels are directly responsible for our health and prosperity over the last century and a half. Far from destroying our planet they have freed us up to act on cleaning our water and air to unprecidented levels. That statement doesn’t reflect reality but you’re entitled to your opinion of course.

Alex November 13, 2011 at 10:00 am

So what will Californians be doing during the night, after the sun sets and the Mojave desert things stop producing electricity?

Just saying.

ApostasyUSA November 13, 2011 at 12:26 pm

“We could probably get almost 500 megawatts of renewable energy for the price we’re paying for this 250 megawatts.”

Really? Solar power is “peak time” generation. It’s is the most valuable power you can buy, especially in California.

So how much is PG& E paying per megawatt? $60, $80? Do you even know?

I think this opinion piece is cursory and most likely written by the detractors of renewable energy.

What it didn’t mention is that California has now installed a gigawatt of solar power and the price per KWH hasn’t really gone up at all.

Paul November 14, 2011 at 11:11 pm

Clean energy: Costs rising for California consumers
http://www.csmonitor.com/Innovation/Latest-News-Wires/2011/1113/Clean-energy-Costs-rising-for-California-consumers

Typical coal fired plant is ~$30 Mw/hr. Nuclear about the same. A bit of surfing will reveal that solar is the most expensive form of energy production.

Ken November 15, 2011 at 4:56 pm

Whats even worse is these solor builders are foreign owned corporations not even in california. Talk about tax dodgers

JD November 15, 2011 at 8:06 pm

The country is going bankrupt, energy is now becoming scarce (aka Jimmy Carter/Oboma) and using the man made perfect storm to ram his earth agenda through.

If people want to pass gas into a balloon and store it, stop eating meat, stop crapping everyday to just 1 time a week then go for it.

Oil is naturally occurring it is not running out, the earth is not 500 billion years old and oil is not coming from dinosaurs.

Once the welfare population and illegals vote Oboma in for a 2nd term watch out, and the end of country is near.

nowsane November 18, 2011 at 5:53 pm

Mr. Kilmartin is right on!

Teriyaki November 21, 2011 at 10:12 am

I agree, pie is delicious

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