"Getting past the outrage factor...what are the ramifications of order-of-magnitude rate hikes ?"

I haven't seen any 10-fold rate hikes. But if they did happen, then if we didn't reduce consumption, our energy spending alone would suddenly be ~2 times the current GDP. There's a ramification for ya.

And keep in mind that a fair cost comparison among renewables, "clean coal" (if that ever materializes), and nuclear must include the costs of waste disposal and recycling/reprocessing, the cost of energy storage as renewables come to provide most of our baseline power, and the ability of fossil fuels (or biomass, waste-to-energy, fuel cells, and batteries) to increase and decrease output quickly as needed.

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Good point Antony. I should have framed my "order of magnitude" statement more carefully. I was getting at the typical Utility Commission proposal for a 1 to 2% annual rate hike shifting to the 30+% to 60+% range. The post as written made it seem like actual rates would go up by X10...not the case clearly. JL

I know that in my area, the utility company must pay so much money every year for energy conservation. They do free energy audits and check everything from your attic to your basement, insulation, light bulbs, fixtures, thermostats, appliances...

When they came to do our EA, they gave us about 5 CLF light bulbs, a water heater wrap, along with pipe wraps, and an idea of what we needed to do for better conservation.

The utility company also uses this money for local and state programs such as the Weatherization. The weatherization people come and do different tests, such as the cubic airflow per sq. foot, (I have no clue, other then we have 2100, and it should be 1800), check your major appliances to make sure they do not use more electricity then they should, then they put the numbers into a computer that helps them figure out where to spend the most money. It usually comes from insulating the attic and sidewalls, along with new appliances, but rarely new furnaces and windows.

Unfortunately, you have to qualify with your income to meet the Weatherization criteria, but if you do, you can thank the local utility company because they are essentially paying for the parts and labor.

It will be nice to see if the higher energy prices will affect how many people go solar. At this time, we are unable to afford the expense, but we are doing home "improvements" that we learned from having the energy audit done, such as filling our attic with the fluffy warm stuff!!!! I can not wait to see how much that improves our winter heating bill... as you see, its August, and in Iowa, that means the cold weather is just a couple months away!

"Five billion dollar nuclear power plants and all the clean coal high tech stuff will generate a lot of opposition when taxpayer power bills are skyrocketing."

This shows a little confusion in terms. In a deregulated power market, for example New York state, wholesale suppliers pay the costs to build new plants. They sell their power at the prevailing rates. A new $5bn nuclear plant would only get built if a company felt that it could earn a sufficient return on the invested capital at the market price of power. The cost of the plant would have no effect on that market price. (To complete the picture: retail providers buy power at the wholesale market price, and sell it to customers at competitive retail prices.)

An expensive new nuke or coal facility only affects power prices in a regulated market: that is, one where a utility is both generator and retailer. In a regulated market, a utility is allowed to earn a set annual return (usually in the range of 10-12%) on its investments. Those returns, along with pass-through costs like fuel, are paid directly by the utility's customers. Consequently the level of capital investment at a utility directly affects ratepayer bills *in a regulated power market*. A regulated utility that builds a $5bn new nuclear plant will then, as you say, increase rates accordingly.

If you remember only one thing about deregulated electric power markets, make it this: in a well-structured deregulated market, additional power plants will lower prices, while in a regulated market, additional power plants may increase them.

And, as a second point, note that the premise of deregulation was that electric power prices would be lower than regulated rates, not that they would be lower tout court.

Five Billion for a new nuclear plant is way too low.

Use current prices please.

Instead of deregulation, we should have focused on decoupling the profits a uitlity makes from its output. The utility should have its profit capped. This cause the utility to encourage consumption as it would lead to better ROE on their end which looks better in the eyes of investors.

We also should have decoupled generation from distribution (like they did in Germany) but doing so sort of requires that more than one utility can feed electricity into one grid which entails large regional grids which doesn't fully yet exist here in the U.S.

Seeing electricity go from $0.10/kwh to $0.15/kwh on average really shoudln't have a huge impact on our economy. Europe does just fine with an average electricity price double the latter number. I see solar coming in at right around $0.15/kwh in three years so if that is the point of grid parity, so be it and look out!

Hawaii generates 85% of its electricity from oil, which has gone from $10 in 1998 to $120 per barrel today. OUr utility rates have not quite gone up by the same amount, but an order of magnitude increase is possible in theory. My utility bill in the last 5 years has gone from $20 to $70, and I didn't even add any new appliances (I got rid of cable, so the TV is on even less).

@ Friend in the Business
Questions for you: I see what your saying about a regulated market. THe utility builds a new nuke plant then goes to the regulators and says, "We have this cost we need to pay back, so we need to raise rates" and the regulators go, "OK". In an unregulated market, the builders only build if they think they'll get profit on their investment. But one thing you didn't take into account: supply and demand. If the utility doesn't build the new plant, there's a scarcity of electricity which causes supply not to meet demand driving up prices (and causing brownouts). This is exactly what happened in CA when Enron was manipulating the markets. How do you keep scarcity from driving prices sky high? This is what's happening in oil markets right now. Also, you need three competitors in any given market to ensure competition, and that's not the case with electric utilities is it?

@ Bob
In 2007 Moody's estimated $5000-6000 per KWh for new nuclear plants. A typical plant is a gigawatt, so that works out to 5 or 6 billion dollars, right on the mark. In June 2008, they upped that to $7000 per KWh, so a bit more, but not "way off the mark." Do you have different information?

Well how much does $5 billion dollars buy you in solar thermal? I'd wager quite a bit more than a GWh. Solar thermal has the added benefit of producing more power when it is most needed, and being cheaper than solar pv. It's all cheaper than nuclear when it comes to desert states like California.

In Delaware our rates have effectively doubled over the past few years, since the end of deregulation here. In that time I've done a lot of projects and cut our use in half. It is a sad thing to see a bill from 2 years ago where I used twice as much, and today's bill where I used half as much, and realize the dollar amount on them is the same.

Deregulation - phooey. They said it would bring competition. There's no competition. Nobody plops down a new power plant to compete with the old one. You get your power from one provider here, which kept the prices low long enough after de-reg to make sure nobody switched to some other company, then jacked the rates once the other companies left the scene. What kind of competition is that?

this isn't a failure of regulation or deregulation. this is a failure of the privately held monopoly concept.

private utilities are mostly corporations. corporations exist to produce as much profit as possible. no matter how you dress things up, regulate, deregulate, reregulate. it doesn't change the foundation of your situation.

private corporations will always seek to increase profits. the easiest way for a private monopoly to increase profits is to convince their regulators to let them increase the price of their product.

nationwide, public power is 15% cheaper and more reliable. for obvious reasons. public power works for the public, not for profits.

www.appanet.org

Even though my PG&E bill is not large, $30-$40 per month, if I were living in a house I would definitely have solar panels on my roof and I would attempt to totally disconnect myself from the grid. I live in California where we've seen for ourselves how deregulation works with the Enron scam.

Seven thousand dollars for a kilowatt hour of electricity plus the cost of building and maintaining a distribution system and a twelve percent profit seems like a very expensive proposition to me.

I for one think higher prices would be a good thing because it would force people's hands on issues like conservasion and it would also make alternatives more competitive in the marketplace.

@ Uriah
Concentrated Solar Power costs about $3 to $4 per watt, compared to $5 to $7 for nuclear. One thing to keep in mind, though, is the capacity factor of each kind of plant. A nuclear plant has a capacity factor of 90%, meaning that over a year, a one gigawatt plant will average 900MW, or 90% of its capacity. A concentrated solar plant, for various reasons (clouds, night) has a capacity factor of about 65%, so a 1 GW station averages 650MW on average. You have to build more capacity to produce the same amount of electricity, about 1.5 GW of CSP. So the costs are roughly the same, with CSP probably being slightly cheaper, coupled with the nice benefit of not having any waste disposal issues, but the drawback of taking up a lot more land. Capacity factors for other renewables are even worse: wind is 30% and photovoltaics are 25%, requiring 3GW and 4GW of installed capacity to equal a 1GW nuclear plant.

"We also should have decoupled generation from distribution "

Yes, they just did that in NYC and my bill just went 30% up. What a stupid idea.
Right now 1KW/h in NYC cost $0.2 and delivery another $0.07 of grant total of $0.27 per 1KW/h.!!!
Lats year there was no delivery charge.

I remember that the same thing happen with deregulation of natural gas few years back. The total bill went 30% up because of delivery charge, and it never went down since that time.

There is no competition in monopoly.

$7000/kWh is also way off the mark, by a factor of h.