Published On: October 8th, 2019Categories: California News

California has some of the highest average residential electric rates in the country, but average monthly bills are among the lowest because homes in the Golden State use less electricity than those in most other states.

But a big question looms as some Northern California cities ban natural gas in new homes in a bid to reduce carbon dioxide emissions linked to global warming: Will residents get socked with higher electricity bills?

The answer likely is yes, at least in the Bay Area, though it involves a host of assumptions about gas and electricity rates, appliance costs and efficiency and regional differences in energy use, igniting a fierce debate among environmental and industry advocates.

“It’s a really complicated topic,” said Carmelita Miller, a lawyer with Oakland’s Greenlining Institute, a social justice group that supports efforts to fight climate change but wants to ensure they don’t penalize the state’s poor. “We want to make sure we end up with healthier people living in their homes and affordable access to clean energy.”

According to the American Gas Association, which represents companies that sell natural gas, U.S. households that use it for heating, cooking and clothes drying save an average of $874 a year compared with homes using electricity.

“Restricting consumer choice and affordability through this ban will make us more dependent on expensive and unreliable energy sources,” said Rock Zierman, chief executive officer of the California Independent Petroleum Association.

But an April study by San Francisco environmental consulting firm Energy and Environmental Economics, which supports a transition to a low-carbon economy, presents a more nuanced picture of potential cost impacts in most of California.

The study, funded by Southern California Edison, Sacramento Municipal Utility District and Los Angeles Department of Water and Power, said most newly built all-electric homes would see bill savings, and only one in 10 would see annual increases of more than $100.

Those who would see the highest increases are in the Bay Area, where many homes don’t have air conditioners because of cooler weather. New all-electric Bay Area homes would gain air conditioning as part of their electric heat pump heating and cooling units.

But Energy and Environmental Economics partner Amber Mahone said factoring in the cost savings for new buildings of not having to pay for a separate gas hookup tends to offset higher electric bills over the useful life of the equipment.

Mahone’s study concluded newly built, all-electric Bay Area houses and low-rise apartments could see net energy costs rise or fall by about $200 a year over the life of the appliances compared with gas and electric homes — depending on a customer’s local climate and energy use.

“You still see increases in bills relative to gas homes,” Mahone said. “But they’re pretty small compared to the capital cost savings, which is why we look at the whole picture.”

Renters, however, aren’t likely to see much benefit from lower building costs and will be more focused on monthly bills. The study found that with conservative rate increase assumptions, new all-electric Bay Area homes could see an annual increase of $100 or less, with lower increases for apartments, which tend to be smaller and more efficient to heat and cool.

But the study warned steeper rate increases could push the annual energy costs for new all-electric Bay Area homes up around $400 a year for houses and $200 for apartments over gas and electric households.

Outside the Bay Area, new homes in the Sacramento and Southern California service areas would see greater savings or at least smaller cost increases, the study found.

The study found electric heat pump heating and cooling units deliver savings over homes with electricity and gas, but those are offset by higher costs for running electric clothes dryers and in many cases, electric stoves and water heaters. Top-of-the-line electric appliances deliver more bill savings but also cost more upfront.

Natural gas heats 86 percent of California single-family homes and most townhouses, mobile homes and apartments. But Mahone said natural gas rates could potentially rise much faster than her study assumed as the costs of maintaining aging pipelines are spread among a shrinking number of households using the fuel, making electricity more competitive.

“There’s almost no future you can envision where gas rates don’t go up faster than we envisioned,” Mahone said.

Jon Switalski, executive director of Californians for Balanced Energy Solutions, a natural gas advocacy group, argued Mahone’s study is based on flawed electricity and gas rate assumptions.

“Every family in California knows that their electricity bill far exceeds their bill for natural gas,” Switalski said.

Officials in San Jose, which would become the largest U.S. city to ban natural gas, acknowledged last month in a City Council memorandum that studies show “an increase in the annual utility costs for all-electric buildings.”

But Mahone’s study said the switch to all-electric housing would deliver significant reductions in greenhouse gas emissions, starting at 45 percent fewer tons of carbon dioxide in 2020 and increasing to 82 percent in 30 years as more clean power replaces natural gas.

In the balance, Mahone said, residents should experience little change in their costs while benefiting from cleaner power.

“I don’t think they should expect big savings or big costs,” she said. “They should expect to see high-performance good equipment and a comfortable home. The carbon savings is kind of a no-brainer — it’s an immediate carbon savings and will only increase every year as the grid gets cleaner.”

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