California Offering Cash Incentives to Cut Energy Use to Avoid Rolling Blackouts

California Governor Gavin Newsom signed an emergency order Friday to provide a cash-incentive program encouraging large energy users to cut down their electricity consumption to prevent rolling blackouts during summer heatwaves.

Newsom announced the emergency proclamation as a way to free up energy supplies to meet demand amid the increasing threat of extreme heat events and ravaging wildfires.

The order directs the state to reimburse California utility companies for payments to customers that agree to cut down their energy usage when the power grid enters those critical periods. The state will pay participating customers $2 per reduced kilowatt-hour.

The customers will have to sign up ahead of time for the program and will be committed to reducing their electricity demand by a preset minimum number of kilowatts per hour, in order to supplement existing programs designed to reduce energy usage.

The new order also eases restrictions on the use of backup generators during energy squeezes and directs state agencies to focus on bringing new clean energy sources into the grid.

"California leads the nation with its ambitious clean energy goals, and with the climate crisis threatening communities across the West, we must take decisive action to scale up and speed up our transition to a 100 percent clean electricity system that meets the needs of the 22nd century and beyond," Newsom said in the announcement Friday.

California energy system
California Governor Gavin Newsom signed an emergency order on Friday to provide cash incentives to large energy users who agree to cut down consumption during extreme weather events. Here, solar panels on part of an electricity generation plant are seen on June 18, 2021, in Kern County near Mojave, California. PATRICK T. FALLON/AFP/Getty Images

"While we build toward a safe, affordable and reliable energy future that benefits all our communities, we're also taking action to meet the challenges caused by climate change that are already at our doorstep" he added.

Marybel Batjer, president of the Public Utilities Commission, told The Sacramento Bee that the state is "still working through the details," of how much money in total will be available as part of the incentives.

Edward Randolph, the commission's deputy executive director, added that the program is available to all utilities in California, not just the big investor-owned companies.

So far, the state has managed to avoid rolling blackouts this summer but faced a close call earlier this month when temperatures skyrocketed and the Bootleg Fire in Oregon dramatically reduced power imports from the Pacific Northwest.

At that time, officials with the Independent System Operator (ISO), which runs the majority of California's electricity grid, said they were worried that residents weren't responding to blackout threats with sufficient voluntary conservation.

The ISO has so far issued six Flex Alerts this summer, or statewide warnings asking people to set their thermostats to specific temperatures or avoid using major appliances and unnecessary lights in order to prevent blackouts.

While the alert system "has been a useful tool," ISO CEO and President Elliot Mainzer told The Bee that the state needs more conservation during moments of extreme stress on the grid, "Given the types of (energy) deficits we're facing."

Officials are hoping that the new cash incentive program will be a positive way to promote greater conservation efforts.

"Summer has barely begun and we have already had repeated extreme heat events creating dangerous conditions and shattering records across the country," the ISO, the California Public Utilities Commission and the California Energy Commission said in a statement earlier this month.

"Climate change is here and with increasing intensity that presents a host of new challenges we must collectively meet head-on."

Newsweek contacted Newsom's office for additional comment but did not hear back in time for publication.