Who Pays Most for California’s Energy?

c_moreno_mendota_500x279High up in the Sierra Nevada, about two hours northeast of Fresno, Calif., PG&E supervisor John Grube helps oversee a 30-year-old hydroelectric plant that generates up to 1,212 megawatts of electricity for the power-hungry San Joaquín Valley down below.

Near the windy Altamont Pass in the shadows of San Francisco, Rick Marks checks on a 32-windmill farm on a private ranch that can generate 78 megawatts of renewable energy.

On the dusty floor of California’s Central Valley, PG&E can produce up to 250 megawatts of electricity per day at its Helm Solar plant, a two-year-old facility that can supply the needs for 10,000 homes. The plant’s solar panels stretch for one mile by half-a-mile.

With California’s growing population and manufacturing needs — plus the decommission of a nuclear energy plant at San Onefre — energy is a commondity whose demand is ever increasing.

And even with the increase in supply, including a proliferation of renewable energy sources in the last decade, some are concerned that lower- and middle-class residents are paying a higher price. In the Central Valley, where poverty and unemployment rates are the highest in the state, families say the high cost of energy is a major concern.

That is one reason Assemblymember Henry T. Perea authored AB 327, which Gov. Brown signed earlier this year. It took Perea three years to convince fellow lawmakers that Central Valley residents shouldn’t be paying higher electric rates than wealthier individuals in Los Angeles or the San Francisco Bay Area.

“The poor get hit disproportionately hard in the San Joaquin Valley because we are an energy-sensitive community. We live in a desert,” said Perea.

Hitting people in their pocketbooks

The state’s complex energy policy divides ratepayers into five tiers. Those who use less energy (such as residents in temperate climates like Los Angeles) pay a lower rate because they use less power. Those in areas where the temperatures soar in the summer and plummet in the winter (like the San Joaquín Valley and the Inland Empire) pay more because they consume more energy.

In theory, said Perea, the system works. But in reality, it forces higher energy costs on those earning $40,000 in the Central Valley than those making $150,000 in Los Angeles.

Perea’s bill allows the state Public Utilities Commission to reduce the number of tiers. Previously, utility companies could recoup their infrastructure costs by charging those in the higher tiers more.

“If the companies had new costs for infrastructure, they can get back their money through their rates, but they’ll have to get it from tiers 3 and 4, which are the Valley and the Inland Empire,” said Perea. “They had very wealthy people paying lower costs for their energy, and we had the poor paying much more.”

The bill also gives the PUC the power to determine rates. Already, PG&E has submitted a plan to compress the tiers to three levels.

The California legislature decided to take the power away from the PUC more than a decade ago when the energy crisis led to zooming costs for electricity. That, said Perea, was not a wise move.

“It was a knee-jerk reaction. The legislature said, ‘Well, since the PUC screwed up, we’ll set the rates.’ Well, we’re not qualified to set rates,” said Perea.

Now that the PUC has obtained some of its power back, Perea wants to see how the commission handles rates.

“If others or I disagree with how they deal with it, we may have to pass legislation,” said Perea, an energy conservationist who mirrors his father’s practice of going around the house turning off lights when a room is not in use.

When it comes to energy, Perea also has concerns about the state’s growing solar energy industry. It’s not that he’s against solar energy; he just wonders about more effective ways to store the electricity that is normally produced when homeowners are not at home for use when they do get home.

The power generated from solar installations on homes like that of farmworker Floricel Martínez of Madera goes into the state electricity system. The farmworker then gets credit for that electricity, which means her electrical bill could be chopped by 80 percent of what it used to be. Her home’s solar installation came courtesy of GRID Alternatives, a non-profit organization that has installed more than 3,000 solar electric systems for low-income families throughout the state.

Perea’s AB 327 also impacts the solar industry.

The bill changed language that makes the 33 percent use of renewable energy a floor and not a ceiling for public utilities.

“This allows for large-scale renewable energy to continue,” said Perea, who said utilities were close to reaching 33 percent “in their renewable energy portfolio.

“One of the reasons I got into this fight was because you had a big disparity in who was using solar rebates and who was paying for them,” he said. “As higher-tier customers, we were paying not only higher rates for energy, but also for those rebates.”

Perea says discounts must be paid by others. In this case, Los Angeles and Bay Area ratepayers, he said, “have gotten a free ride since 2001.”

“We’ve been bearing the cost of you taking advantage of solar energy projects,” said Perea.

Bringing solar to low-income families

GRID Alternatives regional director Tom Esqueda is a big believer in solar energy, especially when it comes to helping qualified, low-income residents.

The organization installs solar energy systems that cost about $15,000 at no cost to the homeowners, who also receive education about energy efficiency. Most of them discover they save 70 percent to 80 percent of their electric bill.

“If we can save them that much money, they now have more to spend on family necessities,” said Esqueda.

The solar energy systems installed by GRID Alternatives in the Central Valley has eliminated 65,916 tons of greenhouse gas over the lifetime of the systems. And, annually, it has taken the equivalent of 11,733 cars off the freeway.

“We bring solar to the low-income community,” said Esqueda, whose organization receives grants for the program.

The organization is now looking to ask those who receive the solar energy systems to contribute back monetarily to keep the program alive.

GRID Alternatives has installed 690 solar units since 2009 in a 12-county region that stretches from Kern County to San Joaquín County.

Another major plus for GRID Alternatives is that it relies on volunteers for the installation. Some of those volunteers have gone on to get jobs in the solar energy field, said Esqueda. Two of his organization’s workers came from a solar energy program run by Proteus, Inc.

“Here in the Valley, the need is big,” said Esqueda, whose Fresno office has nine workers.

The homeowners who get the energy systems, he said, “are sharing the gospel” of solar energy.

Meanwhile, Perea remains a big proponent of all energy sources, although he’d like to see some adjustments made like he did with AB 327.

“I think the future is in having the right energy mix of success,” he said.

“Here’s my concern: California has done such a good job of increasing the amount of solar that is being used right now that we might become victims of our own success.”

Perea points out to recent deal between PG&E and Las Vegas. The Nevada city would get California power, at no cost.

“The trick is that Vegas is not paying for it because we had too much of it,” said Perea.

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