Which factor contributes to rising electric prices in California?

The rising electric prices in California can be attributed to increased costs of NOx (nitrogen oxides) credits. In efforts to reduce air pollution and meet environmental regulations, California has implemented a cap-and-trade system that requires power plants and other large emitters to purchase NOx credits for the emissions they produce. As regulations become stricter and more entities participate, the demand for these credits increases, driving up their cost. This higher cost is often passed along to consumers in the form of increased electric prices, making it a significant contributing factor to the overall rise in electricity costs within the state.

In contrast, increased generation capacity typically works to stabilize or reduce prices by providing more supply to meet demand. Decreased demand for electricity would likely lead to lower prices as well, while a reduction in gas price fluctuations would contribute to price stability rather than an increase.