The Hedge — Brutal Honesty Over Hype Since 2008
The Pitch
Xavier Becerra wants to be your governor. His campaign is built around two core affordability moves: declare a state of emergency to freeze utility rates and home insurance premiums, and enforce existing housing laws against cities that aren’t building. He’s the frontrunner in Democratic polling heading into the June 2 primary.
The Problem with Rate Freezes
California’s electricity costs are high because of wildfire liability exposure baked into utility balance sheets, mandatory grid-hardening programs, the transition to renewable generation, and transmission costs across a geographically massive state. Those are real costs. Freezing rates doesn’t make them disappear — it makes the utility absorb them, defer them, or restructure them onto other ratepayer classes.
We already ran this experiment with home insurance. Proposition 103 effectively froze insurance rate increases for years. The market’s response: State Farm stopped writing new homeowner policies. Allstate stopped. Farmers pulled back. The lesson is simple: you cannot administratively price a product below its cost without the seller exiting the market. Becerra watched this happen during his time in California government. He’s proposing to do it again, with utilities, and calling it relief.
The Problem with “Enforce Existing Laws”
He is a staunch labor ally who insists California housing be built by union labor under prevailing wage standards — a commitment that adds 15–20% to the cost of every publicly subsidized unit. You cannot simultaneously promise to lower housing costs and mandate the most expensive labor regime in the developed world. If you enforce housing laws but require every project to use union prevailing wage, you get somewhat more housing at the same price it’s always been. That’s not an affordability solution. That’s a building permit solution.
The Bottom Line
Rate freezes feel decisive and produce market distortions. Enforcement without cost reform produces more supply at unaffordable prices. Neither gets you where you need to go.
Rating: Polished. Inadequate.
— Timothy McCandless | The Hedge | timothymccandless.wordpress.com
The Hedge 