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High on our own supply

Why is California building fossil-fuel power plants it doesn’t need?

big piece in the Los Angeles Times asks that question.

Californians have done a great job of conserving energy; electricity usage peaked in 2008. Even relatively new power plants have been shut down in recent years because the state doesn’t need their electricity.

But utilities keep building new generators. There are more than 10 plants cued up for approval — a couple are solar and geothermal projects, but most would run on natural gas.

In a sane world, we’d be shutting down the most polluting plants as we ramp up clean energy. But building new plants is incredibly profitable for utilities, so they keep doing it. “Utilities are typically guaranteed a rate of return of about 10.5% for the cost of each new plant regardless of need,” writes the Times.

Basically the incentive system we’ve set up for utilities in the U.S. is great for spurring growth, but terrible for efficiency and achieving our climate goals. It’s also terrible for poor people: Californians are paying $6.8 billion a year more for electricity than they did in 2008, even though they’re using less.

If the full article is too long for you, here’s a great distillation of the main points. And here are some ideas for restructuring the utility incentive system.