Supreme Court Justice Louis Brandeis once famously argued that, when it comes to economic regulation, when the federal government fails to act, "a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country."  Proposition 7, the "The Solar and Clean Energy Act of 2008" (on the November ballot), is just such an experiment (with you as the lab rat), one that will likely spike electricity prices, damage the economy, and worsen the state's finances.

Prop 7 requires all utilities to generate 20% of their power from renewable energy by 2010. It raises the requirement to 40% by 2020 and 50% by 2025, imposing unlimited penalties for noncompliance (penalties that cannot be passed on to ratepayers). Proposition 7 also requires utilities to sign longer contracts (20 year minimum) to procure renewable energy (at government-set "market prices"). The initiative also imposes higher costs on renewable energy projects by classifying them as "public works", mandating "prevailing" (i.e., union-scale) wages (higher costs that will translate into higher electricity rates).

Whether or not one agrees with Prop 7's finding that "Global warming and climate change is now a real crisis" where "We are quickly reaching the tipping point", Prop 7 will worsen state finances and damage the economy.  The Legislative Analyst predicts "higher electricity rates and in turn higher costs to government, particularly in the short term, to the extent that there is increased procurement of more expensive renewable energy".  The LAO predicts that "State and local revenues also would be affected by the measure's impact on electricity rates since tax revenues received by governments are affected by business profits, personal income, and taxable sales--all of which in turn are affected by what individuals and businesses pay for electricity."

Prop 7 seems designed to enrich renewable energy producers at the expense of individuals, businesses, and government (read "taxpayers"), much like ethanol subsidies (another wrongheaded environmental policy) have enriched the farm lobby. Surprisingly, Prop 7 is the brainchild, not of the renewable energy lobby, but of University of Phoenix billionaire John Sperling (famous for spending millions in an attempt to clone his dog and his quest for immortality) and son Peter.

The bad news is that proponents still tout an October 2007 poll showing 75% support (signifying an uphill battle), of course that was before energy prices began climbing to current levels.  The good news is that environmentalist groups, such as the Natural Resources Defense Council, are lining up against the measure along side utilities, taxpayer groups, and even labor unions. 

Hopefully this coalition will be able to overcome the Fighting Phoenicians and the Obama Effect (rapturous, starry-eyed "progressives", full of hope but empty of information).  Otherwise, this state is in for some tough sledding.