California Electricity Costs Run Double National Average as Renewable Mandates Tighten

California electricity prices currently sit at approximately double the national average, according to the latest data from the Energy Information Administration. This premium has widened sharply since the state implemented its Renewable Portfolio Standard, or RPS, which mandates a specific percentage of power generation from renewable sources. Prior to the rollout of the RPS, California’s electricity rates were only 40% to 50% higher than the national norm.

State law requires that 60% of California’s electricity come from renewable resources like solar and wind by 2030. That target rises to 100% by 2045. Wayne Winegarden, a senior fellow in business and economics at the Pacific Research Institute, argues that the current system is driving up costs for working families. He notes that nuclear power, which produces fewer lifetime emissions than solar, does not count toward the state’s renewable quota.

The reliance on intermittent sources like wind and solar creates a need for expensive backup generation. Solar panels and wind turbines only produce power when weather conditions are right. To keep the lights on during those gaps, utilities must maintain additional capacity. The California Energy Commission has decided not to renew backup contracts for three aging natural gas plants in Ormond Beach, Alamitos, and Huntington Beach. Those contracts expire at the end of December 2026.

Utility-scale lithium-ion battery storage systems are set to replace some of that natural gas capacity. While battery technology has improved, it remains functionally limited. Fire risks are also a concern, as seen in incidents at the Moss Landing and Gateway energy storage facilities. Winegarden states that the costs of these backup systems are passed directly to customers on their bills. Advocates for renewable energy often omit these backup costs when claiming that solar and wind are competitively priced.

Transmission infrastructure adds another layer of expense. Solar and wind farms must be located in specific geographic areas, often far from urban centers where the electricity is consumed. This distance requires more investment to build and maintain a larger transmission network. Longer lines running through fire-prone terrain also increase the risk of wildfires if they are not properly hardened and routed.

The state’s management of the RPS program further inflates costs through strict rules on Renewable Energy Credits, or RECs. California imposes tight limits on which credits utilities can purchase to verify their renewable output. These restrictions may obstruct interstate commerce, a point raised in a lawsuit where West Virginia is suing Pennsylvania over similar closed-border policies. Winegarden points out that greenhouse gas emissions have declined in states both with and without RPS mandates since the national peak in 2007.