Dan Walters: Cost of reaching for the sun will soar

As Gov. Jerry Brown participated in a Capitol menorah-lighting ceremony this week to mark the onset of the Jewish holiday Hanukkah, he uttered a secular prayer for a miracle that would make California a model of carbon-free energy.

Today's miracle, he said, "is not to find more oil, but to utilize the sun," adding, "when we continue to use our intelligence, we're going to take that sun through the miracle of modern science and technology, and we're going to light up California, our cars, our homes, our air conditioners."

It was one of several recent events at which Brown disparaged global-warming agnostics and touted renewable energy and a new law that requires utilities to obtain a third of their power from such sources by 2020. Utilities are expected to contribute more than a third to the reduction in California's carbon emissions.

Both Brown and predecessor Arnold Schwarzenegger contend that taking the global lead in reducing greenhouse gases will pay economic dividends – someday – as the state becomes a leader in developing solar panels and other equipment to reach its goals.

But will it?

While the technological pathway to a low-carbon society is clear – more solar panels, more windmills, more battery-powered cars, more trolleys and trains and so forth – the costs of massive conversion will be hefty.

One hint comes from a report prepared by the Division of Ratepayer Advocates, an internal watchdog at the Public Utilities Commission, which is goading utilities to meet the tough renewable standard.

The division's report says, in effect, that the PUC's pressure on utilities is causing them to sign renewable energy procurement contracts at costs that are well above those from standard, gas-fired power plants.

A PUC allocation mechanism designed to hold down those costs has been totally consumed by the flood of contracts, the report says, and the PUC "has approved nearly every renewable contract filed by the utilities, even when contracts rate poorly on a least-cost, best-fit basis."

So far, the utilities are committed to spending – and their ratepayers to financing – at least $6 billion in above-market power costs, with more to come.

California's average retail electric rate of 13.24 cents per kilowatt-hour is already the ninth highest in the nation, 50 percent above average. And when those "renewable portfolios" come online, power bills will ratchet rapidly upward.

The question unanswered so far is whether in our rush to be a renewable energy leader, we will be unable to attract the job-creating private investment we need to pull out of our economic doldrums.

It would be tragically ironic if we couldn't build solar panel factories because our low-carbon, high-cost power rates drive investment elsewhere.