If the "we" means California, that that also includes me, and it's pretty clear that we don't have high costs because of the generation side, but because CPUC keeps on approving massive rate increases for grid costs.
It costs ~$0.13/kWh to generate the electricity (which includes any battery costs), but $0.25-$0.50/kWh to deliver the energy across the grid.
The utilities get guaranteed profits from rate-basing all the grid stuff, but the generation side is a more competitive market.
Batteries could be used to greatly reduce grid costs by flattening peaks and decreasing grid congestion. If CPUC mandated that utilities took those cost-saving measures...
Yeah, compare the Sacramento municipal rate[1] is compared to what SCE or PG&E prices things, and it's crazy. Average in California is $0.32[2]; I pay about $0.28, but I have a TOU plan and charge my car during super-off-peak so that brings my average down.
Sacramento municipal has a lot of customers in a small space. Running a grid in and around a major city is significantly different than covering an entire state with lots of mountains and forests from Oregon to San Luis Obispo.
PG&E is expensive even when compared to the entire Western grid. I went and added up the revenues for all the major utilities in Arizona, Colorado, Nevada, New Mexico, Oregon, and Utah. That's APS, NV Energy, Pacificorp, PSCo, PSCNM, and SRP.
All of their 2024 revenues combined are ~$22B vs PG&E's $24.4B, to cover an area 3x larger with just over half the population and even drier climates. All of those states have lower average rates as well.
PG&E is uniquely expensive for no legitimate reason that I've ever been able to discern.
The jump in PG&E prices over the past 10 years is mostly to cover the cost of wildfire mitigation. LA, Palo Alto, Santa Clara, and the Imperial Valley have their own local utilities that charge customers 1/2 to 1/4 of what PG&E charges.[1] But PG&E covers the entire northern half of the state. Bay Area PG&E customers are subsidizing all those small communities nestled in the forests. Southern California Edison and San Diego have a mix of urban and forested rural closer to PG&E, with significant wildfire mitigation costs of their own, and their rates reflect that--2/3 to 3/4 of PG&E prices).
Despite approving the cost increases, state regulators are now complaining that PG&E is spending too much on wildfire mitigation. For example, they're telling PG&E to shift from burying transmission lines to using covered conduction (i.e. plastic shielding around overhead transmission lines). But PG&E is pushing back because they're on the hook for the wildfire civil claims and argue the less costly mitigations are too risky.
It seems to an outsider like California involves exceptional biodiversity, and exceptional habitat protection laws, coupled with the electorate's vocal idealism about the possibility of preventing preventable animal suffering, plus the distaste of many voters for a schedule of very frequent controlled burns in all parts of the state in order to thin the constant buildup of combustible underbrush. These leave PG&E unable to avoid being liable for interactions of transmission lines with the wildfire kindling they have to route through. Even though California may not be more mountainous than those other Western states, its development pattern may have more wildland-subdivision interface overall, which adds up.
If you actually meant revenue when you said revenue, then it shouldn't be surprising that PG&E has higher revenue compared to companies with half the population. Revenue is merely income, no costs will be deducted from that number. So, if PG&E has the same revenue but twice the customer base, that means they're extracting on average, half the money per customer as those other companies, which doesn't make them sound more expensive! Did you mean profit?
Utilities put most of their revenue back into costs and I'm not interested in the relative profitability, so I really do mean revenue. I'm assuming that users correlate to revenue, and the primary cost driver is service area, which means the efficiency is the ratio between area and revenue. I'm also making the simplifying assumption that the major utilities service their entire states and that the area being discussed is large / demographically similar enough that a lot of the other differences average out. These aren't true (e.g. PG&E only services part of California), but I'm hoping it's sufficient for a sanity check.
The ratio of revenue to area served here is radically different though and the other states are significantly better. We can make a prediction to double check this that people in those states pay lower rates on average, which is also true.
If you want to go and add up the customers directly, PG&E serves 5.5M. The others serve around 8.3M people collectively from some quick searches. I don't have info on actual service area, nor do I really want to spend months writing an industry report on it.
I'm in the upper Midwest; you're paying more to generate than I do on my residential bill. 10.9 cents /kwh in winter, 12.3 cents in summer. 1/3 coal, 1/3 gas, 1/3 assorted renewables.
Also California is somewhat unique because it has the extreme energy demand of the likes of Texas coupled with natural disasters like wildfires. California gets really hot and AC needs to be blasting. Factor in that California also has a huge economy (datacenters...) and it's clear the grid is under an amount of stress that is not typical.
> Batteries could be used to greatly reduce grid costs by flattening peaks and decreasing grid congestion. If CPUC mandated that utilities took those cost-saving measures...
Can you math this out somewhat? I certainly can see some grid cost reductions from batteries, but we still need a pretty extensive grid to support baseline load and maintenance of rural lines. How would shaving the load peak from 100% over baseline down to a lower number help?
Given that we are nearing the normal lifespan of much of our rural electric infrastructure that was installed in the mid-20th century, it's not surprising that we have a lot of spend to do. Private utilities love to defer maintenance, especially when it takes 80 years to notice.
The math will be extremely dependent on each particular transmission alternative. The overarching term is "non-wires alternatives" of which storage is just one alternative.
NYISO has a slide deck here, but unfortunately there's not much quantitation to the savings in their examples:
While that's an interesting proposition, that could at most reduce our rates by their profit rate, which is not nearly enough.
We need systematic changes to fundamentally lower costs to more reasonable rates, like what other smaller municipal utilities deliver in California, which are 1/3-1/2 the cost.
The problem is not profit, but how profit is established. PG&E takes a fixed rate of profit of the total cost, so they are incentivized to make everything as expensive as possible. This is in contrast to most market based systems, where a new competitor with lower costs gets to directly take the lowered cost as profit. We instead use regulatory boards, Public Utility Commissions, to determine which investments utilities can make and what prices they can charge customers. This is highly regulated, but the outcomes have been terrible. Even Arizona, whose equivalent of the PUC has been disastrously corrupt, or places like Ohio, which has sent state legislators to prison for their corruption on utility matters, have far lower rates than we do in California.
We have bad regulation in California. That's the fundamental problem. Gavin Newsom, and all the governors who came before, have failed us on our electrical grid. That said, clearly high electricity prices are not a huge problem for our economy, and the high cost of living from high housing costs is clearly a driver of expense for everything a utility does, but we fundamentally have not had the right controls on the grid to keep costs reasonable. We have not set up a system where PG&E profits from delivering lowered costs. Our regulation prevents us from achieving what Marx calls the "falling rate of profit" as we would usually see with a market. Something must change, but simply eliminating PG&E profits won't do it, it's not enough.
Fires are a natural occurrence in California. They happened before humans were there. They're caused by dry conditions and the absence of sufficiently recent fires to have cleared out the abundance of fuel (i.e. dead trees). The source of the fire is not particularly relevant because the fire is the inevitable natural consequence of the conditions. If it isn't caused today by a power line it will be caused tomorrow by a lightning strike.
But if a lot of homes burn down and the insurance companies and/or homeowners have more political power than the electric utility, the liability gets shifted there by the politics. And then your electric bill is going to suck in order to pay for the people who built their homes in an inadvisable place.
> They're caused by dry conditions and the absence of sufficiently recent fires to have cleared out the abundance of fuel
They're made possible by that. The stacking of fuel, on it's own, does not magically create fire.
> The source of the fire is not particularly relevant
Of course it is. We're talking about liability and costs. It's extremely relevant.
> caused tomorrow by a lightning strike.
Then no one should live in California at all. Lightning can strike anywhere. Yet we have a precise map of where all our infrastructure is. Just because one category of risk is difficult to manage does it give you a free pass to ignore others that are easier.
> homeowners have more political power than the electric utility
Do you honestly expect this wouldn't be the _norm_? Why shouldn't it be? You really want to live in a state where a utility has more political power than you? And supposing they did, are you suggesting that would be better than the current outcome?
> who built their homes in an inadvisable place.
Take a look at the map of the lightning fires from 2020. Show me which people were in an "inadvisable place." We're talking about millions of people here representing billions of dollars of economic activity.
Do we want to measure risk realistically? Or are you just enjoying some bizarre modern schadenfreude of watching someone's life burn to the ground because you don't like the plot of land they were on? What about those who inherited that land and home?
> They're made possible by that. The stacking of fuel, on it's own, does not magically create fire.
The fire triangle is fuel, oxygen and heat. Oxygen is in the air at all times. When the fuel is on the ground, the only thing remaining is heat, and there are both artificial and natural sources of heat. Which means there is going to be a fire whether there is an artificial source or not.
> Of course it is. We're talking about liability and costs. It's extremely relevant.
We're talking about snookering the electric ratepayer for the cost of inevitable fires by pretending that removing one source of heat could have prevented the fire.
There is a plausible case that having more frequent fires is less damaging because it prevents fuel from accumulating. The more fuel is allowed to accumulate the bigger and faster spreading the next fire is when it happens, and the more difficult it is for firefighters to prevent it from spreading into populated areas.
> Then no one should live in California at all.
There aren't that many fires in modern urban areas because the urban areas aren't full of dead vegetation.
The people who choose to live in fire-prone woods are making a different choice.
> Do you honestly expect this wouldn't be the _norm_?
The issue is that decisions should be made using reason rather than political machinations. Because it isn't actually the power utility paying for this, it's the rate payers. When it should be the people buying houses in a tinder box.
> We're talking about millions of people here representing billions of dollars of economic activity.
Which seems like a dumb thing to put in places that are inevitably going to be incinerated?
> Do we want to measure risk realistically?
The way you do this is by putting the cost of the fires on the insurance companies rather than the utility companies, and in turn the insurance premiums of the people who live there rather than the utility bills of the people who live somewhere else.
> What about those who inherited that land and home?
You're not required to use something dangerous just because you got it from your parents.
