Clean Power Plan Will Raise Power Costs for San Diegans, Worsen Energy Poverty

Clean Power Plan Will Raise Power Costs for San Diegans, Worsen Energy Poverty

Energy poverty is a growing problem in San Diego’s working-class communities, and across California.

If you spend more than 10 percent of your income on electricity, natural gas, and other household energy costs, then you are afflicted by energy poverty. It is a tragedy that forces some families to choose between keeping the lights on, or putting food on the table, because they cannot afford both.

Hard-working families need relief from rising energy costs. According to a 2011 survey, 52 percent of respondents said they were having a more difficult time affording their energy bills compared to the prior year. Forcing these families to pay even more out of pocket every month for their power bills will only worsen this situation.

Unfortunately, that’s exactly what is coming their way if a misguided plan being pushed in Washington, D.C. goes forward. The goal of the plan, called the Clean Power Plan, is to reduce greenhouse gas emissions generated by power plants. Several states sued the federal government, arguing that the Obama administration did not have the power to implement the plan absent an act of Congress. Right now, the proposal is on hold as it is being reviewed in federal court.

How would the Clean Power Plan affect your electricity bill? I recently authored a new study with the Pacific Research Institute titled “The Clean Power Plan’s Economic Impact.” It explores how the new government mandates in the Clean Power Plan would impact household electricity costs, and the power bills of all Californians. You can read the study — and view an interactive map to see what it will mean for your community — at www.pacificresearch.org.

My research confirms our worst fears — the Clean Power Plan will raise electricity costs in California, while increasing the number of people living in energy poverty. Costs will go up for everyone, but low-income communities will be disproportionately affected.

Across the state, families in California’s poorest neighborhoods could see average annual electricity costs equal to 17.36 percent of their income once the Clean Power Plan is fully implemented. On average, Californians could soon find themselves paying nearly $1,200 a year for electricity.

In San Diego, for example, average annual electricity costs could go up by roughly 8.5 percent under the Clean Power Plan. Neighboring communities in Riverside and San Bernardino Counties could see their costs increase by 8.6 percent.

Neighborhood by neighborhood, families in less affluent communities will bear higher electricity burdens than wealthy communities. Just up the coast in the South Bay of Los Angeles, the electricity burden for residents of wealthy Palos Verdes was just one-third to one-fifth of the burden of residents living in a working-class community only two miles to the east.

We should not be surprised by the study’s results. The Clean Power Plan is another example of a big government program from Washington D.C. that, despite its intentions, creates unintended consequences that overwhelm any potential benefits.

In this case, San Diegans and millions of others could soon endure a harsh economic reality for a program that won’t meaningfully reduce emissions or improve the environment.

Perhaps the biggest concern about programs like the Clean Power Plan is that they will trap more people in a life of poverty.

The federal government provides financial assistance to help the poor afford the high costs of energy. And, more and more people need the help these energy assistance programs offer due to the growing affordability problem. As evidence of this, the number of U.S. households receiving energy assistance from the government was 40 percent higher in 2014 than before the Great Recession.

The poverty trap ensnares families because rising incomes threaten their eligibility for assistance programs. Ironically, poor families may find that they are better off financially if they do not try to work their way up the economic ladder in favor of remaining eligible for their current energy subsidies.

The bottom line is that poor and middle-class households simply cannot afford the high costs that the Clean Power Plan would impose on the economy.

Instead of looking to government for big programs and costly new mandates, we should look to the free market. By encouraging innovative, market-based solutions, we can reduce emissions in California and across the country — without increasing costs to taxpayers or pushing more into a life of energy poverty.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.