Californians are paying billions for power they don’t need

The Sutter Energy Centre, at its 2001 launch, was hailed as the US’s cleanest power plant – it generated electricity while using less water and natural gas than older power plants. However, in 2016 the US$300m power plant closed indefinitely – just 15 years into an expected 30- to 40-year lifespan.

The power the plant produced is no longer needed, mainly due to the construction of a plant only 40 miles away in Colusa, which opened in 2010. Two other large and efficient power plants in California are also facing closure many years ahead of schedule – like the Sutter plant, there is little need for their electricity.

To cover the cost of the new plants whose power is not needed, Californians are paying a higher premium to switch on lights or turn on stoves. In recent years, the gap between what Californians pay versus the rest of the country has nearly double to about 50%. Although California uses 2.6% less electricity annually from the grid now than in 2008, residential and business consumers together pay US$6.8b more for power than they did back then.

The additional cost to customers will add up to many billions of dollars over the next two decades. Regulators have approved higher rates for years to come so utilities can recoup the expense of building and maintaining the new plants, transmission lines and related equipment, even if their power is not needed.

For more information on why Californians are paying billions for power they do not need, see full article.