A Free-Market Energy Blog

California Energy Update: Part V

By -- April 17, 2014

• Green Power Keeps Shifting Costs to Ratepayers Who Don’t Use It
• What’s Best Way to Save Water and Energy During CA Drought?
• CA Desert Solar Tower Project Zoning Shifts Pollution to Las Vegas
• Appeals Court Rejects Nat Gas Power Plant on Same Day as Power Alert
• State Senate President Call for Carbon Tax on Gasoline
• L.A. Times Undermining of Climate Change Could Affect Court Fights
• Union Hires Pollster on Shifting to Municipal Power in Davis, California

Green Power Shifting Costs onto Ratepayers Who Don’t Use It

“Cost Shifting, a situation where the price of one product or service is higher than it should be in order to pay for losses on another product or service for which the price is too low.’”

– Cambridge Dictionaries Online

California Energy Markets recently reported that three California cities just won agreement from regulators to reclassify solar power transmission costs as distribution. The cities are Pasadena, Riverside and Azusa.

That means the cities reaped a 25 percent reduction in long-term solar power contracts. This seemingly bureaucratic fight over how electricity costs are divvied up provides another example of how the Golden State subsidizes “green” power behind the scenes and shifts its extraordinary costs onto all electric ratepayers.

Conventionally, electrical transmission is considered conveying electrons from a power plant to a substation; distribution everything from the substation to retail customers. But the California Public Utilities Commission (CPUC) has now redefined distribution as any power line less than 200 kV.

This is resulting in a lower wholesale power price from solar power plants in California’s Antelope Valley north of Los Angeles and in the Mojave Desert. This regulatory-created price discount allows solar power to better compete with wholesale natural gas prices by shifting the extra transmission line costs onto ratepayers who don’t use green power.

California Energy Markets found that the three cities cut the purchase price of 25-year solar power contracts from two 20-megawatt solar power plants for wholesale electricity from $0.095 to $0.07 per kilowatt-hour. That’s a 25 percent cut.

The 25 percent cost savings on the cities’ share of the wholesale price of electricity will be made up by other electric ratepayers within Southern California Edison’s service area being charged a higher transmission fee by California’s Independent Service Operator.

The higher fee will show up on customers’ electricity bills — which already are high.

Operational, overhead and transmission costs have to be added to the $.07 per kilowatt-hour charged for retail electricity to customers. For example, here are the charges for the electricity users in Pasadena:

Transmission: $0.08 per kilowatt-hour.
Distribution: $0.04 per kilowatt-hour.
Current energy charge: $0.12 per kilowatt-hour.
Total electricity charge: $0.20 per kilowatt-hour.

See more at: http://www.calwatchdog.com/2014/0403/ca-green-power-keeps-shifting-costs-to-ratepayers/

What’s the Best Way to Save Water and Energy During CA Drought?

Multiple-choice quiz: which sector has the greatest potential for water and energy conservation during California’s compound drought and human-made water shortage?

A. Municipal water
B. Agricultural water
C. Environmental water

Municipal Water. A statistic that is frequently heard is that energy comprises 80 percent of a municipal water district’s operating costs, as Catherine Wolfram and David Zetland wrote in a March 3 op-ed in the Los Angeles Times (“Water Conservation’s Other Benefit: It’s a Power Saver”).

But government statistics show the actual cost is less than half that.

According to the U.S. Environmental Protection Agency, energy costs are about 40 percent of total operating costs for municipal drinking water. The EPA further estimates that only 3 to 4 percent of all electricity consumption in the United States is used to provide drinking and wastewater treatment services.

A recent study by the Metropolitan Water District of Southern California reported:

“The California Energy Commission has estimated that the state’s energy consumption related to the conveyance, treatment, storage, and distribution of its water supply is approximately 19 percent of the total statewide energy usage.”

However, of the total energy use for municipal water, 14 percentage points go to heat, cool, treat, process and pump water on one’s own property. Thus, only 5 percent of energy consumption is directly related to the storage, conveyance, and treatment of municipal water.

So if you answered “A” above, you are wrong.

Agricultural Water. Another oft-repeated statistic is that agriculture uses “80 percent of all the state’s water.” For example, on Tuesday KCRA.com in Sacramento reported on the meeting in Merced of the Governor’s Drought Task Force. It quoted Felicia Marcus of the State Water Resource Board, who said, “It’s horrifying agriculture uses 80 percent of water in California so they are going to take 80 percent of the hit,” meaning conservation measures.

Not so. Those who propound this percentage don’t define what they mean by “all.”  So, is it:

• All rainfall — 194.2 million-acre feet?
• All system water — 82.1 million acre-feet?
• All water for human use — 43.1 million acre-feet?

When politicians and water experts say agriculture uses 80 percent of all water, they mean 80 percent of the smallest pool of water for human use. By defining “all water” as the smallest pool of water, the percentage of water used by agriculture thus is inflated to 80 percent.

On average, agriculture uses only 42 percent of all system water and only 17.7 percent of all average annual rainfall and imports, according to the California Department of Water Resources.

Agriculture uses 80 percent of potable water for human use, but not “all state water.” However, farms use raw water, not potable water.

Again, if you answered “B” above, you were also wrong.

Environmental Water. Oddly, where most of the water is allocated in California is to the environment, not farming or lawns and swimming pools.

In a wet year, 64 percent of all system water is dedicated to the environment — where it is flushed to the sea through rivers, mainly for fish runs. In California, water storage in reservoirs depends on capturing excess water in wet years to use during dry years. And where most of the system water goes to in wet years is to the environment. And wet years are the most important in California because they are when surplus water must be stored up for dry years.

When we think of “environmental water,” we think of water flowing by gravity in natural rivers, streams and lakes. But in a modern technological society, water has to be captured in storage reservoirs to prevent flooding and released to rivers for fish runs. In other words, water for the environment also has to use electricity. But water flushed to the ocean for fish runs does not drive hydropower turbines along the California Aqueduct when water is conveyed to Southern California cities. So environmental use of water also does not generate any cheap, clean hydroelectric power either.

So, if you answered “C” above, you were correct! Environmental use of water wastes the most water and energy in California, especially during wet years.

To read more go to: http://www.calwatchdog.com/2014/03/016/drought-whats-the-best-way-to-save-water-and-energy/

Solar Tower Plant Zoning in CA Desert Causing Pollution in Las Vegas

“The CO2 intensity of U.S. coal heat combustion is 2,249 pounds per megawatt hour of electricity while conventional natural gas was 1,135 pound per megawatt hour. The new 377-megawatt Ivanpah Solar Tower Power Project in the Mojave Desert would now emit 30.85-tons of C02 per hour to pre-heat boilers during the night, during cloud covers, and before each operational day.”

The U.S. Bureau of Reclamation’s policy of zoning specified areas of the Mojave Desert for mass solar farms is emerging as a source of air pollution that could worsen smog in the city of Las Vegas. But how so you ask? Isn’t solar power clean energy?

The largest solar thermal power plant in the world is the 377-watt Ivanpah Solar Thermal Power Plant located in the California Mojave Desert 35-miles west of Las Vegas. Ivanpah just began generating electricity in February. It encompasses 4,000-acres of land with 173,400 heliostatic mirrors used to focus heat toward three central towers as tall as 40-story buildings, each driving a steam turbine to generate electricity.

However, on March 26, 2014, Ivanpah applied to the California Energy Commission and Air Resources Board for permission to burn natural gas to pre-heat its steam boilers for electricity generation five hours per day instead of one hour per day. This would result in 92,200 tons of C02 emissions per year, the equivalent of emissions from 16,500 cars.

However, according to an April 26, 2010 article in the Las Vegas Sun newspaper “New Wave of Solar Plants Could Worsen Air Quality,” there were 60 new solar plants planned to build out in the Ivanpah area, many of which would be solar thermal power plants.

Ivanpah is designed to replace so-called “dirty” coal-fired power plants of the Navajo Generating Station in Arizona and the Intermountain Power Plant in Utah that both serve the Los Angeles area.

So mass solar thermal power plants in the Mojave Desert will end up reducing relative regional air pollution in the Western U.S. but increase absolute local air pollution in the Las Vegas-Lake Mead area.

See more at: link pending at Calwatchdog.com

Appeals Court Rejects Nat Gas Power Plant on Same Day as Power Alert

We do not find substantial evidence to support [the Public Utility Commissions’] finding that the Oakley [586- megawatt natural gas power plant] project is needed to meet specific, reliability risk.”

– Presiding Justice Barbara Jones, First District Court of Appeals in San Francisco, Feb. 6, 2014.

California is the original home of the movie industry.  But inventing an absurd scene such as occurred on Feb. 6 would be hard to invent for even a Hollywood move scriptwriter.

The First District Court of Appeals in San Francisco rejected an appeal by Pacific Gas and Electric of a lawsuit brought by green power providers and union-controlled The Utility Reform Network. The lawsuit opposed a new gas-fired power plant in the City of Oakley, located in the eastern portion of the San Francisco Bay. The California Public Utilities Commission (CPUC) had approved the siting of the new Oakley power plant.

But in California, truth is stranger than fiction or even a Hollywood movie script.

On February 7, California’s Independent System Operator, which regulates the state’s electricity grid, called for a rare voluntary emergency curtailment – or Flex Alert — in electricity use from 1 p.m. until 10 p.m. The unusual reason: the East Coast of the United States was demanding more natural gas than expected for heating and extra power backup due a “freeze off.” Another reason for the demand for natural gas in the Eastern U.S. was the expansion of green power that has increased the demand for natural gas during the hours when green power is not available.

The only major interstate natural gas pipelines stretching into California from the East are in Southern California. Thus, we are mainly talking about a curtailment of natural gas plants in the south half of the state. However, the grid alert was called statewide to free up gas from the rest of California to make up for the gas lost by Southern California.

The spot price for natural gas at the Southern California Border Hub shot up from about $5.00 per million BTUs (MMBtu) to more than $20.00, according to the website www.naturalgasintel.com. However, the Southern California Gas Company’s four underground natural gas storage facilities totaling 136 billion cubic feet of gas reserves protected against gas-supply imbalances, curtailments, and price arbitrage during the emergency crisis.

In California the courts are overruling approvals for natural gas power plants while the state’s grid operator calls for emergency curtailment of electricity use in order to convey natural gas to eastern states to meet the demands of a cold snap in weather. Don’t look for this story to be made into a Hollywood screenplay anytime soon however.

To read more go to: http://calwatchdog.com/2014/02/07/east-coast-freeze-triggers-voluntary-ca-electricity-cutback/

State Senate President Calls for Carbon Tax on Gasoline

“A proposed new carbon tax would bring California’s already hefty 71.9 cents a gallon in gasoline taxes up to a whopping 83.9 cents a gallon. A 10-gallon fill-up at a service station even on a Toyota Prius would cost $8.39 in just taxes alone; taxes on a 30-gallon fill up of an SUV would run $25.17! The carbon tax on gasoline would raise $1.9 billion in estimated taxes per year. “ (Author)

California State Senate President Darrell Steinberg announced on Feb.20, 2014, that he is proposing a straight carbon tax on gasoline. His proposal would replace the provisions of the state’s Cap and Trade emissions permits program that are scheduled to kick-in on fuel suppliers for the first time next year. Under Steinberg’s proposal, California’s Cap and Trade program would remain untouched for stationary sources of emissions such as utilities, manufacturers, and food processors.

Cap and Trade is a program whereby the Air Resources Board regulates air pollution by auctioning pollution permits. Industries and utilities can choose to cut back their pollution to allowable levels or buy or trade pollution permits.

Steinberg’s carbon tax is a “carrots and sticks” proposal. It would offer carrots to:

• Environmentalists in the form of a direct carbon tax to reduce emissions even though Cap and Trade emissions auction permit fees are preferred by most state environmental organizations.
• A $600-tax credit to low-income wage earners to offset high gasoline costs, and
• Would provide the petroleum industry with a simple gasoline tax that it prefers to Cap and Trade emission auction permits.

The “stick” in Steinberg’s proposal is that he and the Democratic Party are hell-bent on railroading the unpopular High Speed Rail project through this year before the Democrats lose their supermajority in both houses of the legislature.

Can Steinberg create a legacy of the High Speed Rail Project before leaving office in November? Democrats are risking a lot of political capital to get their High Speed Rail project. But would voters want a High-Speed Rail project in return for higher gasoline prices?

The new carbon tax would bring California’s already hefty 71.9 cents a gallon in gasoline taxes up to a whopping 83.9 cents a gallon. A 10-gallon fill-up at a service station even on a Toyota Prius would cost $8.39 in just taxes alone; taxes on a 30-gallon fill up of an SUV would run $25.17! The carbon tax on gasoline would raise $1.9 billion in estimated taxes per year.

Meanwhile, the State Teacher’s Retirement fund still has $73.7 billion in “unfunded liabilities.” And support from the powerful teacher’s union would probably be needed to pass a gasoline tax for a luxury High Speed Rail jobs program over funding teacher’s pensions. And teachers commute to work and pay gasoline taxes.

For more see: http://calwatchdog.com/2014/02/24/steinberg-calls-for-carbon-tax-on-gasoline/

L.A. Times Drought Data Undermines Case for Global Warming in Courts

See LA Times California Drought History from Tree Ring Data

It wasn’t the intention of the Los Angeles Times, but the newspaper has provided historical drought data with implications for a U.S. Supreme Court case that was heard Monday, Feb. 24 — “U.S. Chamber of Commerce v. U.S. EPA.”

The case challenges whether the U.S. Environmental Protection Agency can expand its mission from reducing air pollution to fighting global warming without going back to Congress for authorization to do so. This has relevance for the California Air Resources Board and its similar shift from reducing carbon dioxide emissions to the more obscure task of fighting “climate change.”

Assembly Bill 32, the state’s far-reaching environmental law, is known as the Global Warming Solutions Act of 2006. But CARB changed the focus of AB32 with the release of its “Climate Change Scoping Plan” in 2008.

Experts were retained by the Times to reconstruct 1,000 years of climate records from tree ring data (“Severe Drought? California Has Been There Before,” Feb. 23). Thick rings indicate wet climate and tree growth and narrow rings dryness and less growth.

A chart showing the 1,000-year record of “wetter than average” and “drier than average” years indicates that 1580 was the driest year on record. California had a severe dry spell from 1976 to 1977. But the only years that were drier were prior to 1580. This data refutes the contention that industrialization has resulted in either significant global warming or vaguely defined climate change.

See more at: http://calwatchdog.com/204/02/24/l-a-times-undermining-of-climate-change-claims-could-affect-court-fights/

Electrical Workers Union Hires Pollster on Municipal Power in Davis, California

Opinion Poll. “Something that supposedly shows what the majority of the people want. Something that has nothing to do with what the people need.”   (The Urban Dictionary)

An opinion poll sponsored by the International Brotherhood of Electrical Workers found a plurality of Davis voters, 47 percent, opposed creating a municipal electric utility. The poll was conducted by the independent Fairbank, Maslin, Maullin & Associates.

IBEW spokesperson Hunter Stern said:

“Davis voters see through the false promises. Politicians promise green power at not greater cost. But voters understand that’s just empty rhetoric. Davis deserves safe, reliable power that is truly green. This plan is not it, and voters know it.”

FMM&A, as the polling firm calls itself, sent the union a memo concluding (boldface and underline in original):

“Overall, the survey found that voters are satisfied with the services provided by PG&E, and are strongly inclined to oppose a proposal for the City of Davis to take over the electric utility. An overwhelming majority of voters are satisfied with PG&E – particularly with the utility’s reliability. Voters are not confident that the City of Davis could do a better job, and perceive PG&E as both the better service and also more likely to achieve clean energy goals. When asked directly, a plurality of voters would oppose a City of Davis takeover of the electric utility, and anticipate that such a takeover would have a negative impact on the City budget, electricity rates, and service reliability.”

Results of Union Poll on City of Davis Takeover of PG&E

Yes – 34%
No – 47%
Undecided – 19%

Marin County and the San Joaquin Valley Power Authority have already uncoupled itself from PG&E and established its own municipal Energy Authority. City and County of San Francisco elected officials are opposed to opting out of electric service from PG&E, despite strong advocacy in favor of the proposal by special interest groups. Sonoma County is in the process of opting out of PG&E and creating its own municipal electric service called Sonoma Clean Power

(See here: http://www.cpuc.ca.gov/PUC/energy/Retail+Electric+Markets+and+Finance/070430_ccaggregation.htm 

See more at: http://calwatchdog.com/2014/03/20/poll-davis-voters-oppose-socializing-electricity/


  1. Tom Tanton  

    Late breaking news: Steinberg has withdrawn his carbon tax on transportation fuels proposal; he wants more of the cap trade tax for other things.


  2. Tom Tanton  

    Just a note on some late breaking news; Steinberg has withdrawn his carbon tax on transportation fuels proposal; he want more cap trade revenue for other things. Tried to comment on MR site, but keep getting error messages.
    Thomas Tanton
    President, T2 & Associates; Energy Innovations Everywhere
    (916)645 2854
    (603)218-7079 (fax)


  3. wlusvardi  

    Just a note on some late breaking news; Steinberg has withdrawn his carbon tax on transportation fuels proposal; he want more cap trade revenue for other things. Tried to comment on MR site, but keep getting error messages.
    Thomas Tanton
    President, T2 & Associates; Energy Innovations Everywhere
    (916)645 2854
    (603)218-7079 (fax)


    • wlusvardi  

      Thanks for the update. California State Senate President Darrell Steinberg has probably withdrawn his carbon gasoline tax because he can not get a coalition together to pass his Bullet Train Project, which the tax would have funded. It is an election year and legislators don’t want to put their finger on the politically electrified rails of the boondoggle Bullet Train Project. So now legislators and the governor will try again to fund the Bullet Train from Cap and Trade emissions auction revenues, which other special interest groups in the Democratic Party are fighting over. Cap and Trade is evolving into another highway slush fund.


  4. Gregory Rehmke  

    Enjoyed especially the “best way to save water and energy” segment. A few thousand homeschool debaters, many in California, have marine natural resources as their topic. I’ve been posting on the economics of water policies and posted article on topic with links.



  5. A Panama Canal for California Salmon? – Economic Thinking  

    […] Thanks to MasterResource.org blog for link to Cal Watchdog post! […]


Leave a Reply