Electric Shock

Charles Crumpley
Editor and Publisher of the San Fernando Valley Business Journal

Is Kevin de León trying to kill off what’s left of California’s manufacturing?

He must. The leader of the California Senate a couple of weeks ago introduced a package of bills that call for a 50 percent reduction in petroleum use by cars and trucks and a 50 percent increase in energy efficiency in buildings, and demands that 50 percent of the electricity generated in the state must come from renewable sources, all by 2030.

All this earns him the warm applause of his base – he was accompanied by environmentalists, union folks and renewable energy entrepreneurs at his press conference – as he pushes the state’s businesses out into the cold.

Look, Californians already pay 50 percent more than the national average for electricity. Industrial customers, including many manufacturers, pay 79 percent more. As a result of that and California’s other high costs, the state has languished with about 1 percent annual growth in manufacturing jobs since the recession while the rest of the country has boomed at close to 7 percent.

And if these bills pass, electricity rates are bound to become shocking, making the state look even uglier to manufacturers. Of course, the effect doesn’t stop with much higher electricity costs.

“This proposal…is an attack on the petroleum industry,” said Tupper Hull of the Western States Petroleum Association. “It will be extraordinarily expensive and coercive. I mean crushingly expensive.”

How expensive no one seems to have calculated. (Why isn’t legislation like this required to submit an economic impact statement?) But whatever the cost is, Californians may well be all alone in bearing these self-inflicted shots.

“We’re going to oppose this very vigorously and not be apologetic about it,” Hull said.

California already has the highest gasoline prices in the continental United States but hey, maybe we can be twice as high as No. 2. Or three times as high. That’d be great for the economy, no?

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