Tom Steyer Aims at Affordability and Misses

California’s regulatory regime, built by special interests and feel-good billionaire activists like him, is the real cause of the crisis, writes Joe Lonsdale.

Letter to The WSJ.

"I don’t disagree with Tom Steyer on breaking up state monopolies, but California’s regulatory regime, built by special interests and feel-good billionaire activists like him, is the real cause of the affordability crisis (Letters, Dec. 1).

Yes, utilities like PG&E hold monopoly power, but two-thirds of states also rely on monopolies without facing California’s crushing electricity costs. In neighboring Nevada, where the market is fully regulated, prices are roughly a third of California’s, despite the latter’s supposedly competitive, partially deregulated system. The real problem is that the state leverages its utilities’ balance sheets to push environmental agendas.

Initiatives like “Public Purpose Programs” hide taxes in electric bills, forcing ratepayers to subsidize electric vehicles and climate initiatives—adding 6% to electricity costs in PG&E’s territory in 2024. In the 2010s, state renewable portfolio standards, which Mr. Steyer supports, led utilities to lock in expensive solar contracts—in some cases, at $197/MWh before prices fell to between $25 and $30/MWh, saddling ratepayers with above-market costs. Their focus on “green at any cost” diverted resources from grid maintenance, contributing to catastrophic wildfires that cost tens of billions, again passed to ratepayers.

If Mr. Steyer were serious about reducing energy prices, he’d advocate eliminating hyperaggressive renewable portfolio standards, the cap-and-trade system and the low-carbon-fuel standard, which create unnecessary costs in gas and electricity markets.

Energy aside, fixing affordability requires undoing decades of policies that make it difficult for businesses to operate. The Private Attorneys General Act enables corporate shakedowns for minor technical violations, with 9,400 notices in 2024, a 22% increase from 2023. Since 2013 it has caused $10 billion in payouts from businesses forced to settle to avoid expensive legal battles.

The same dynamic applies in housing. California’s permitting process takes 49 months for multifamily developments vs. Texas’s 27 months, with a monthly time tax of $1,284 per unit. Municipal impact and development fees average $29,000 per unit compared with $1,000 in Texas and $12,000 in Colorado.

Even everyday essentials have a California premium. Proposition 12’s cage-free mandates have increased egg and pork prices by roughly 20%, hitting low-income families the hardest and hurting smaller farmowners who lack the capital to transition their farms.

Making California affordable means cutting the red tape strangling the free market. Busting monopolies is fine, but without the courage to challenge the regulatory state, Mr. Steyer’s campaign is more political theater.

Joe Lonsdale

Austin, Texas

Mr. Lonsdale is a founder of Palantir and managing partner of 8VC."