California's High Power Prices Could Derail Liberal EV Dream
California electricity rates are increasing far faster than the rest of the country. Last year, electricity prices rose 1.7 times faster than the rest of the county, and residential prices jumped 2.7 faster.
These increases are terrible news for residents who want to swap their combustion engine vehicles for electric ones.
Pacific Gas & Electric Co. (PG&E), Southern California Edison Co. (SCE), and San Diego Gas & Electric's (SDG&E) exceptionally high power rates make charging an electric vehicle very costly and could soon be as expensive as filling up a combustion engine vehicle at the gas station, according to Environment & Energy Publishing.
"It's a huge problem," said Severin Borenstein, director of the Energy Institute at the University of California, Berkeley's graduate business school. He said if people who embraced EVs begin to "tell their neighbors about their catastrophic electric bills" after charging up at home, "that's gonna be a huge problem."
"Or we're gonna mandate electrification and then there's just going to be huge political blowback."
"Mandating electrification when you're charging people 30 or 40 cents a kilowatt-hour is going to be immensely expensive," Borenstein said.
Mark Toney, executive director of the Utility Reform Network, recently told attendees at a conference that "if you want people to make big investments in electrification, there needs to be some kind of a payoff for them."
"And the payoff has got to be that we make electricity rates look very affordable by comparison to the alternatives," Toney said.
The bad news is that energy prices aren't coming down any time soon as consumers are grappling with the highest inflation rate since the early 1980s. The even worse news is the entry cost of owning a new EV, such as a Tesla, is out of reach for most Americans and continues to increase as industrial metal prices for batteries increase.
Suppose there are limited cost savings benefits to buying an EV because power prices are the most expensive in the country. There could be a substantial political blowback as progressives in the Golden State have already mandated that gas car sales will be banned in 13 years (or by 2035).
If California wants to live out its liberal electrified utopia, it may want to consider increasing nuclear power generation on the grid to lower power prices.