Newsom launches billions in rebates to offset rising energy costs some blame him for

(The Center Square) - California Gov. Gavin Newsom announced billions of dollars in energy rebates for homeowners to offset ballooning energy prices that critics say amounts to "peanuts" to distract from utility costs.

California energy prices are double the national average, and ratepayers for the state’s two largest utilities are paying double what they paid 10 years ago and more than 50% more than in 2021.

“Thousands of dollars are now available for California homeowners to install heat pumps, making your home more energy-efficient and reducing your energy bills by hundreds of dollars each year,” said Newsom in his rebate announcement. “With these new rebates made possible by the Biden-Harris administration, Californians can save money and take real climate action.”

The new rebates offer up to $8,000 for heat pump systems for single-family homes, whose households make up 56% of Californians and whose owners are substantially more likely to vote, according to polling. The average heat pump system costs over $12,000 after rebates, according to Carbon Switch, though these estimates do not appear to yet count the newly announced rebates.

Critics argue the rebates are a marginal handout compared to rising energy costs — the typical Los Angeles electricity customer pays $185 per month for energy, and rates are expected to keep rising, especially with Newsom's plan for electricity to be 90% renewable by 2035 and 100% by 2045.

“This is turning into a pattern for Newsom - drive costs through the roof, then give people peanuts so it looks like he’s concerned with affordability,” said California Assembly Republican Leader James Gallagher, R-Yuba City, to The Center Square. “Nobody is fooled - Californians pay the highest cost of living as a direct result of Newsom’s policies. A few crumbs from the governor isn’t going to change anyone’s mind.”

In addition to the homeowner rebates, California ratepayers get two $71 payments per year from the carbon credit system credited to their utility bills, or an average of $11.3 per month. However, because utilities have to purchase credits when they use natural gas for energy, and pass those costs onto consumers, these partial refunds do little to offset rapid rate increases.

California currently gets 45% of its power from natural gas, an energy source in California that is one-third cheaper than the national average but is the governor’s top target for phasing out through renewable energy.

California solar energy has already received over $100 billion in investments, while reaching the state’s wind energy goals could cost over $300 billion. Expanding California’s ports to handle the construction of offshore wind farms is expected to cost $12 billion alone, in addition to tens of billions of dollars of transmission line upgrades.

Water power from dams, one of the most cost-effective and most reliable forms of renewable energy, has also been targeted by the governor, who has authorized the largest dam removals in U.S. history.

At the start of November, Newsom signed an executive order for the state to examine why the state's electricity costs double the national average, seek more federal funding, shift more costs for electric companies currently paid for by users to state or federal taxpayers, and increase biannual cash transfers to consumers from the state’s carbon credit system.