Energy Implications of the 2010 Census

CENSUS 2010 California % Change

The early snapshot results from the 2010 Census are out and they offer insight and uncertainty for California and many other energy markets, and they challenge the infrastructure strategy conventional wisdom across the nation.

The census data across the nation tell a story of a move on the move. The populations of the Southern and Southwestern states are growing faster and at the expense of the Northeast and Midwest states. The outmigration is across the board from whites, black, and Hispanic groups.  While this trend is not ‘new’ news the numbers are beginning to make a difference. North Carolina grew 18.5% compared the national average of 9.7% as a result of this migration.

California grew by 10% only slightly better than the national average. California’s cumulative costs and hassles of doing business are beginning to show in the numbers as adjacent states pick up new residents attracting Golden Staters to seek their gold where housing is cheaper and taxes are lower. The San Francisco Bay Area including Silicon Valley has not seen such slow growth rates since the 1930’s. And California growth is concentrated in the Central Valley and Southern California outside of the Los Angeles area shifting the power base in California from the traditional LA and San Francisco strongholds.

The largest California counties are still growing with Los Angeles growing by 3.1 percent, San Diego by 6.9 percent, San Jose by 5.7 percent, San Francisco by 3.7 percent, but Fresno County grew by 15.7 percent.  Here in the San Francisco Bay area Contra Costa County grew by 10.6% faster than any of the other nine Bay Area counties which only averaged 5.4 percent growth since 2000.

But California’s economic growth has slowed dramatically. The 5.4 percent Bay Area growth is the smallest net growth since the 1930’s. Oakland lost 2.2 percent of its population since 2000 as people voted with their feet in search of better, more affordable housing, safer streets, better schools and a desire to live closer to where they work.  Governor Jerry Brown and the Legislature are debating how to close the State’s $25 billion deficit with the Governor pushing $12 billion in spending cuts and $12 billion in tax extensions which still require voter approval.  Slow growth as seen in these numbers suggests the deficit problem will return and the options to deeper cuts are getting fewer.

The Bakersfield Effect and the Rise of the Great Central Valley. The energy, water  and policy dynamic in the numbers is that for more than a decade the State of California and the environmental and policy advocates who have influenced elections have been engaged in a policy war against the Great Central Valley scaling back or cutting off its water for environmental reasons, advancing AB32 for emissions reduction, setting renewable energy standards and installing smart meters which along with a tiered rate structure gave rise to an outcry in Bakersfield that still ripples through the utility industry and smart meter vendors.

The challenges are not just state imposed, the Federal Government owns or controls great swaths of land and resources across California and Federal environmental and land use restriction have hit the Great Central Valley hard.  Along the border drug traffic and other border problems make some areas dangerous and scare off business.

The great American melting pot is alive and well with a rich diversity widespread across the nation. Both Hispanic and Asian segments of the population are growing and in some states including California the traditional “minorities” are in the aggregate now the majority of the population. The truth is except for the politics of the immigration issue California has proven quite capable of assimilating new immigrants from many nations and dealing constructively with the diversity of its communities.

Implications for Energy, Water and Public Policy

  • California imports about 19% of its electric power requirements, but it bans new nuclear power plants and coal plants, and it prohibits its regulated utilities from buying power generation from coal plants in other states.  Slower growth may make it more difficult to achieve California’s AB32 emissions reduction goals and its ambitious 33% renewable energy targets.
  • Gaining access to the California market for clean energy supplies requires transmission access but the states jealously guard their control over transmission siting and interstate cooperation between the Federal Government and states is inconsistent.  While the CAISO says the WECC can accommodate up to 20% renewable energy in the grid transmission access remains a key impediment.
  • Perversely, faster growth in population in the Central Valley could shift some water use from agribusiness to municipal uses but that shift could also cost jobs if agribusiness scales back.
  • Outmigration from the Midwest may make possible a faster retirement of coal fired generation in that region as could a material growth in new natural gas suppliers from unconventional sources, but almost any combination of early retirement and new build of renewable energy will increase utility rates.