Did energy prices rise three times faster in California, as TV commercial claims?

MEDIA: Television.

WHO: Arizonans for Affordable Electricity campaign.

TARGET: Proposition 127.

COMMENT: “California tried this (increasing a renewable energy mandate), and now their electric rates are increasing three times the national average.”

FORUM: Television advertisement

WHAT WE’RE LOOKING AT: Whether a clean-energy policy in California caused electric rates toincrease at three times the national average. 

ANALYSIS: Prop. 127, also known as the Renewable Energy Standards Initiative, is on the Arizona ballot as a proposed amendment to the state Constitution. Prop. 127 would update and increase the current state requirement that utilities get 15 percent of their energy from renewable sources by 2025. 

The amendment sets a requirement of 50 percent renewable energy by 2030. 

Arizonans for Affordable Electricity — funded by the parent company of Arizona Public Service Co. — has campaigned heavily against Prop. 127. A television ad paid for by the group states: “California tried the clean energy mandate and their rates are increasing three times the national average.”

In October 2015, Gov. Jerry Brown signed a bill that updated California’s Renewable Portfolio Standards to require 50 percent of electricity from renewable sources by 2030.

A correlation does exist between California’s pursuit of clean energy and an increase in electricity prices there. But as every college freshman studying statistics learns, correlation does not equal causation.

AZ Fact Check used the annual State Electricity Profiles published by the U.S. Energy Information Administration to compare the average national electricity price and the average price for California each year from 2011 to 2018.

California had a steady increase in utility rates in comparison with the rest of the country, even before the new energy mandate took effect.

From 2012 to 2015, the rate increased a total of 1.92 cents per kilowatt hour, or about 14 percent. From 2016-2017, the year used in the claim, the rate increased about 6 percent.

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Meanwhile, the national rate increased 2.5 percent from 2016 to 2017.

Using these numbers, California’s rates actually increased slightly more than two times the national average.

Arizonans for Affordable Electricity says the new mandate has caused the increase since 2016.

The campaign cited an article from Environmental Progress, an energy research non-profit in Berkeley with a focus on nuclear power, to argue a causal relationship between the clean energy mandate in California and the increasing utility rates.

The Environmental Progress article used different data to reach their conclusion on the increase in rates. The authors divided total revenue from sales of electricity by the total number of gigawatt hours used.

Doing that shows California rates increased three times the national average. Arizonans for Affordable Electricity use this figure in the advertisement.

The article’s authors, Michael Shellenberger and Mark Nelson, argued that wind and solar require backup power from fossil fuels and need expensive transmission infrastructure. They said this causes retail prices to increase despite the low costs of clean energy.

“California stands as a warning to the people of Arizona,” Shellenberger wrote in an email to AZ Fact Check. He said his statements are on behalf of himself, not Environmental Progress. 

“If Prop. 127 passes, the consequence will be more pollution and higher electricity rates. That’s what happens whenever nuclear plants are closed and replaced by renewables and fossil fuels.”

APS has warned that Palo Verde Generating Station, the nuclear plant near Tonopah and the nation’s largest power plant, could close if the renewable measure passes.

The research produced by Shellenberger and Nelson isn’t universally accepted.

Dylan Sullivan, policy director of Clean Energy for a Healthy Arizona and senior scientist at the National Resource Defense Council, said he does not consider the California experience to be applicable.

Clean Energy for a Healthy Arizona is the group pushing for the passage of Prop. 127.

“(The Environmental Progress article) is more of an opinion piece with citations,” he said.

He said California has higher utility costs likely because of long-term contracts with utility companies that have expensive rates.

“These are not quick projects — they take 20 years and the contract rates stay for a while. California made investments and acted early; they started with renewable energy eight to 10 years ago, when it was way more expensive.” 

“Arizona is not California,” he said. “We are in need (of) new power plants and infrastructure. Arizona would be making an investment in clean energy when solar and solar-plus-storage are the cheapest way to serve new energy needs.”

Sullivan said the relationship between renewable energy and utility costs remains unclear. 

“No one has shown in a systematic way that renewables alone have caused rates to rise. (The Environmental Progress article) rests on hunches,” he said.

Shellenberger and Nelson’s article has prompted responses from researchers who noted that it tried to tie a complex situation to one cause. 

Joshua Rhodes, research fellow at the Energy Institute and Webber Group at the University of Texas-Austin, published an article in response to Environmental Progress. 

He found the issue to be bigger than one cause. He wrote, “While Shellenberger raises some good points, the real story, like the grid itself, is more complicated.”

Rhodes looked at transmission and operational costs, outdated infrastructure, effects of inflation, the grid variability, and locations of renewable energy plants as significant factors that could affect utility rates.

He concluded, “The grid has many moving parts, so claiming cause-and-effect between any two factors is problematic. The claim that wind and solar alone have driven up the cost of electricity is just too simplistic.”

Rhodes’ conclusion highlights the limitations of Shellenberger and Nelson’s article. They relied on a hypothesis by another researcher, James Bushnell, an economist and professor at University of California-Davis, to argue the causal relationship. 

Bushnell suggests California quickly added renewable energy sources when there was not a sufficient need among consumers and pushed out working traditional plants. The policy, he argued, caused disruptions to California’s economy and complicated the market.

However, Bushnell did not explicitly argue that renewable energy alone caused electricity prices to increase. He wrote how the policy contributed to an already-existing energy dilemma in California. 

AZ Fact Check found that research has not reached consensus on a cause for California’s expensive rates. Rather, several potential drivers exist: 

It is clear that the research produced so far has not definitively shown that clean energy alone has caused the spike in prices. 

BOTTOM LINE: The campaign Arizonans for Affordable Electricity cited an Environmental Progress article by Michael Shellenberger and Mark Nelson to claim that the clean energy mandate caused California’s electric rates to increase three times the national average.

Arizonans for Affordable Electricity relied on this for the claim in their advertisement. The claim uses a calculation involving electricity sales data to reach the numeric conclusion, while AZ Fact Check looked at a government report that simply lists average prices.

While it is clear prices in California have increased, published research has not shown a causal relationship between renewable energy and higher utility rates. That research has suggested many potential drivers to costs in California. The clean energy mandate is just a part of the picture.

Arizonans for Affordable Electricity has used the claim, however, to try to convince voters that passing Prop. 127 will make their bills increase.

THE FINDING: No stars: Unsupported.

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