Can You Spare 16 Cents?

Last month, politicians in Virginia shot down a deal in which Invenergy would sell its wind power to a large local utility. Regulators believed that the project would unfairly raise electricity costs in lieu of cheaper alternatives like natural gas. According to the New York Times, residential electric bills would have increased by 0.2 percent. Assuming the average residential bill is $80 (which it is), this would have increased the average homeowner’s bill by a whopping 16 cents. That’s about 2 tablespoons of a Starbuck’s coffee.

Healthy and secure world for ourselves and our children? No. Grande mocha frappuccino? Yes, please.

Our electric grid is very different than most people think. People assume that electricity production is subject to a thorny thicket of environment regulations. They also think that a mix of corporate greed and environmental legislation has caused sky-rocketing electricity bills unheard of in years past.

According to Credit Suisse, however, the American electric fleet is a dirty aging behemoth. Currently 70% of the coal fleet is over 30 years old and much of the fleet is lacking meaningful environmental controls like scrubbers and SCRs. “Of the roughly 340 GW of coal capacity, a little over 140 GW lack scrubbers or SCRs, 60 GW have scrubbers but no SCRs, 60 GW have SCRs but no scrubbers, and about 85 GW have both scrubbers and SCRs.” Thus, there is a meaningful hole in environmental controls across the US power generation fleet.

Not only is our electric fleet a lot dirtier than anyone imagines, electricity is cheaper than we imagine as well. The real cost of electricity nationally has actually fallen over the past 30 years, even with the rate step-ups from the early 1980s. Furthermore, spending on electricity and natural gas as a percentage of personal disposable income is currently at 50 year lows.

If you think solar power is an evil ploy from abroad destined to take down the US economy, you may point to the fact that three of the world’s largest solar markets are Germany, Japan and Italy, aka the original axis of evil. Today 2% of Germany’s power is supplied by solar power, compared to 0.1% in America. The country is on track to provide 20% of its power from solar by 2020. This momentous transformation has created thousands of jobs while providing much needed energy security for the nation, not to mention cleaner air and water. This has cost the average German ratepayer the equivalent of $1 per month.

Americans think that they have two options when it comes to green energy: pay now or don’t pay at all. Unfortunately, if we don’t pay now we will pay later and the pay later method is a HUGE environmental and economic unknown. The coal fleet is dying and it’s being replaced by a new breed of natural gas plants that rely on a dubious and undocumented extraction method known as fracking. Right now most of the negative externalities of fracking such as waste water creation, intense water usage, pumping billions of gallons of undisclosed chemicals underground, natural resource destruction, and green house gas emissions, are not incorporated in the price of the gas. If they were, natural gas would go up at least a percentage or two, and at most a whole lot of percentages.

In Kentucky this year, the public service commission voted down a contract for a local utility, Kentucky Power, to buy electricity from renewable energy provider NextEra Energy.

Kentucky’s Attorney General Jack Conway, joined by business and industrial electricity users, opposed the deal, contending that it would have increased a typical residential customer’s rates by about 0.7 percent and was “a discretionary expense” that the utility’s customers could ill afford.

What we can ill afford is to live in fear because we are killing our planet, losing the international green energy race, and all the while delaying the inevitable and unknown payments of cleaning up a mess of our own making.

Way to go Jack.