7 responses to “Affordability Problems Explained”

1. Joe

   January 28, 2019

   Here’s the Sac Bee report on PG&E:
   Hours before the expected bankruptcy filing, the Public Utilities Commission — ignoring dozens of chanting protesters — agreed Monday to let PG&E borrow $5.5 billion to steer the company through bankruptcy. Also Monday, a group of investors offered $4 billion in separate financing to help PG&E avoid bankruptcy, according to Bloomberg news.
   State regulators and elected officials aren’t looking forward to this, either, as they struggle with the idea of granting at least some measure of relief for a company that’s become extraordinarily unpopular.
   They’re hoping to cobble together a giant settlement plan that will somehow enable PG&E — or whatever the entity is that emerges from bankruptcy — to provide reliable service and prevent more wildfires while paying its debts without gouging ratepayers.
   That’s a tall order. In the short run, despite their antipathy toward PG&E, state officials have to make sure the utility is healthy enough to keep the lights on and ramp up safety efforts for the upcoming fire season.
   https://www.sacbee.com/news/state/california/fires/article225112025#storylink=cpy
   ————-
   “Keep the lights on”, now there is something for the new Guv to work on.

2. Joe

   January 29, 2019

   PG&E pulled the bankruptcy lever as expected and here is some reaction via the WSJ article:
   The restructuring process could provide an opening for PG&E to amend or cancel some $34.5 billion in longstanding contracts to purchase wind and solar power, many of which were negotiated when market prices were much higher.
   The fate of those contracts has raised concerns among wholesale power providers like Consolidated Edison Inc . and NextEra EnergyInc. that renegotiation could create uncertainty for future development.
   “It could have a real ripple effect throughout the power industry, not just with respect to the existing contracts that are there,” said Luckey McDowell, a partner in Baker Botts’ restructuring group. “It could have a chilling effect in respect to new investment.”
   California Gov. Gavin Newsom has also expressed worries about the potential cancellation of the contracts, which could affect the state’s ability to meet aggressive goals to cut greenhouse gas emissions and combat climate change.
   ——————
   Repeat mantra: “Keep the lights on”.

3. waterpower

   January 29, 2019

   Washington and Oregon both have massive % of electricity coming from hydro. Probably can account for much of the difference in cost.

4. resident

   January 29, 2019

   California should be able to buy hydro generated power at less than those quoted rates for Washington and Oregon (wholesale) from them and transmit it down here for much less than what we are paying now. The wind and solar are really expensive. They are getting cheaper but the old contracts are locked in at old prices which was stupid. Maybe this chapter 11 will end up saving poor us money.

5. Joe

   January 30, 2019

   The SacBee adds on to the “highest fuel tax in the nation” bit here:
   A committee working on behalf of the California Energy Commission discovered an “unexplained surcharge” in September 2017 costing Californians over $17 billion since February 2015, or $1,700 for a family of four.
   In the letter, Levine and his colleagues told Becerra the surcharge averaged 2 cents per gallon from 2000 to 2014 but soared in 2015 after the Torrance refinery fire. The cost spiked to an average of 24 cents a gallon in 2018.
   “Over the past several decades, the petroleum industry on the West Coast has been subject to dozens of independent investigations by government agencies, all of which concluded the dynamics of supply and demand are responsible for movements in the price of gasoline and diesel fuel,” Kevin Slagle said. “In addition, many ever-changing factors, including the higher cost of producing … gasoline (according to California Air Resources Board requirements) and state programs, such as cap-and-trade and the Low Carbon Fuel Standard, impact fluctuations in energy markets.”
   Read more here: https://www.sacbee.com/news/politics-government/capitol-alert/article225267740#storylink=cpy
   ————–
   The $1700 per year for a family of four is probably more like $2500 all in–close to a months rent.

6. tera ostergerg

   January 31, 2019

   What climate change are we speaking about? What a joke. More “flat-earth” climate change advocates. When are you going to stop stealing from the poor to fund this Hoax Climate Change Theory? https://youtu.be/mqejXs7XgsU

7. Just Visiting

   January 31, 2019

   This all explains why there is negative growth and real estate prices have been collapsing since all those regulations and taxes have been in place.
   Oh…wait…
   Those dated apartments on El Camino aren’t expensive because of the cost of power.
   The cost of housing (and commercial real estate)–the main driver of “affordability” is driven by demand–not the cost of power or high marginal tax rates. It’s expensive to rent/lease because the competition for the space is so fierce.
   That’s not to say that the cost of power isn’t a big (and complex) issue, but for some reason the demand for businesses here continues to expand, bringing jobs, which bring new people, exacerbating the demand for housing. That’s why commercial and residential real estate is expensive–and that’s the main driver for some businesses choosing to go elsewhere; and why some residents are forced elsewhere. But still not near enough businesses choosing to go elsewhere to counteract the increasing demand.
   In an economically efficient world, the cost to lease or buy business property here would be high enough to peg the demand perfectly where same number of businesses leave as come, keeping the pricing relatively steady. Obviously that is not the case now.