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California Utilities Want to Charge The Wealthy More

Three major utility companies in California have jointly proposed a new billing system that charges customers based on their income.

The new system that Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric want would feature a flat-rate charge based on income, with monthly bills split into two parts: a fixed-income rate and a reduced usage charge based on consumption.

Low-income households would pay as little as $15 a month, while households earning over $180,000 a year could pay up to $85 more per month. If customers can exert greater control over their electricity usage, they can lower their bills.

“The income-based bill proposal is part of the companies' compliance with legislation passed by the California state government last year requiring these types of plans for utilities,” reports ABC 7. “The California Public Utilities Commission would have to approve the proposal and make a final decision by mid-2024. The fixed rate could start showing up on bills as soon as 2025.”

US Interconnection Backlog Jumps 40%

According to a report from the Lawrence Berkeley National Laboratory, the total capacity of energy projects waiting for approval in US interconnection queues leapt 40% YoY last year. More than 1,350 GW of generation and 680 GW of storage await approval.

“The total capacity of all projects awaiting interconnection now exceeds the capacity of the entire U.S. power plant fleet, and, in most regions, the peak load that generation aims to serve, according to the Lawrence Berkeley National Laboratory, although the gains aren’t even across all regions,” reports Utility Dive. “Two key regional transmission organizations — the California Independent System Operator and the PJM Interconnection — saw fewer projects apply for interconnection last year as a result of reform efforts that have hit pause on project intake.”

Wait times for interconnection are also ballooning, with projects spending an average of five years in queue for approval. Most of the projects trapped in approval limbo are renewables, with solar and battery storage making up 80% of new projects added to the queue.

Average Solar LCOE Increases for the First Time

Wind and solar just saw their average price go up for the first time.

“A new report by Lazard compares the levelized cost of energy (LCOE) for various generation technologies on a $/MWh basis,” reports PV Mag. “It shows that utility-scale solar and onshore wind LCOE increased for the first time in 2023, at $24/MWh to $96/MWh for solar and $24/MWh to $75 MWh for wind.”

LCOE was developed by Lazard to help investors figure out which power plants are worth investing in. For years, LCOE calculations have shown wind and solar costs plummet as compared to their competitors. This apparent affordability has been used to argue for wind and solar’s economic superiority.

But LCOE is far from perfect.

“Levelized cost of electricity tells you the cost of the electricity, but only when that power source is generating electricity,” Paul Bonifas, director of operations for 9H Research Foundation, which is partnered with the University of Wyoming, recently told Cowboy State Daily.

In other words, LCOE treats intermittent and non-dispatchable resources in the same manner as reliable, dispatchable ones. LCOE fails to treat electricity as a whole system that delivers power 24/7 and falsely equates the cheapness of a given generator with the cheapness of the electricity is produces.

So, even the calculation that most favors wind and solar shows that their costs are beginning to climb.

For more about the history of LCOE, see this interview with Mark Nelson, president and founder of the Radiant Energy Group, on Decouple:

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Conversation Starters

1. Dude, where’s my Chinese steel demand? “Owners already alarmed by the underwhelming state of the capesize markets in recent months must now brace for a disappointing steel season out of the sector’s most important nation, China,” reports Splash 247. “‘Chinese steel prices have been under pressure recently, which appears to be impacting momentum in the capesize market,’ analysts at Jefferies suggested in a note to clients yesterday. Falling steel prices have been a ‘headwind’ for cape rates, Jefferies maintained. Chinese rebar had bottomed at $500 a ton in November and rallied towards $650 a ton gradually in early March. However, over the past several weeks prices have come under pressure with the latest price at $590 a ton.”

2. A German utility jacked up its electricity prices hours before closing its nuclear plant. “Thousands of consumers in North Rhine-Westphalia have to dig deeper into their pockets for electricity: market leader Eon will increase its prices for basic services on June 1st, as it is telling many customers these days,” reports Reinische Post. "‘In parts of NRW, the new working price is 49.44 cents gross per kilowatt hour, which means an adjustment of around 45 percent for average consumption,’ confirmed a spokesman for Eon Energie. The comparison portal Verivox calculates what this means for a three-person household in NRW that is supplied by Eon in the basic supply: From June it pays 2125 euros for an annual consumption of 4000 kilowatt hours of electricity.”

3. There’s a loophole the size of fossil fuels in the G-7’s new climate pledge. “The meeting of Group of Seven energy and environment ministers ended Sunday without a deadline to halt new coal investments or the kinds of firm commitments that climate advocates have said are necessary to limit global warming,” reports Bloomberg.

   “In its official communique, the Group of Seven ministers pledged to work toward cleaning emissions from power generation and reducing vehicle emissions by 2035, but it left open the door to new investment in natural gas and ongoing use of fossil fuels.”

Crom’s Blessing