California Prays to the Sun God

California is often where bad ideas spring to life these days, and they’re worth highlighting lest they catch on in saner precincts. Consider the state Energy Commission’s decision this week to mandate solar panels on all new homes. Meanwhile, Democrats bemoan the lack of affordable housing. Hmmm, maybe there’s a connection?

Regulators say the panels will add $8,000 to $12,000 to the cost of a home, which may be chump change in the Bay Area where the median home price is $1.2 million. But that’s a lot of money in Fresno or Bakersfield.

The commission’s estimate that the mandate will add only $40 to a monthly mortgage appears to assume that interest rates stay low forever, that the cost of panels continues to fall and that Congress extends the 30% renewable energy tax credit.The average cost of a rooftop solar panel system today is $18,840, which amortized at a 5.5% interest rate over 30 years is $107 a month.

Oh, and to ensure panels are operating efficiently, homeowners would have to pay between $300 and $500 for an annual cleaning and inspection. Repair costs average $650. This is a boon for contractors, which is why the home builders lobby endorsed the mandate. Crony green capitalism lives.

Regulators also say the panels will shave $80 off monthly utility bills, but that’s only because the state’s 50% renewable-energy mandate has made electricity so expensive. The retail rate of power in California is about 19.15 cents per kilowatt hour, twice as much as in Washington and a third higher than in Arizona.

Homeowners with solar panels also benefit from the state’s net metering subsidy, which compensates them for the excess power they produce and remit to the grid at the retail rather than wholesale rate. Yet California sometimes produces so much solar power that it has to pay Arizona to take it to avoid overloading power lines.

Thus, utilities pay homeowners to produce energy that they don’t need at a huge mark-up and then send it to Arizona at a loss. Brilliant. Balancing the electrical grid will also become more expensive and challenging due to the solar-panel mandate.

California’s astronomical housing costs are a result of these government mandates, zoning restrictions, and permitting fees. The state Legislative Analyst Office estimates that it costs between $50,000 to $75,000 more to build a home in California than in the rest of the country. Building a low-income housing unit costs about $332,000.

Last year the Democratic legislature approved a $4 billion general-obligation bond for the November ballot and imposed a $75 fee on mortgage refinancing to expand “affordable” housing. The Democratic model in a nutshell: Make housing more expensive with government mandates and then subsidize it, which makes it still more expensive.

Liberals have long supported more dense housing to cut carbon emissions, yet Democrats earlier this year killed legislation that would have streamlined reviews for housing projects by public transit stations. “Density for density’s sake doesn’t necessarily lead to affordability,” declared state Senator Ben Allen of the People’s Republic of Santa Monica.

All of this explains why hundreds of thousands of middle-class Californians are fleeing. In 2016 Arizona welcomed twice as many Californian refugees as Mexican immigrants. California’s labor force last year expanded by a mere 1% compared with 2.2% in Nevada and Arizona. Sharing a border with California is a gift that keeps on giving.

Original article appeared on The Wall Street Journal: https://www.wsj.com/articles/california-prays-to-the-sun-god-1526079559