Monthly US Natural Gas Electric Power Price. Image credit:US Energy Information Administration.
As the title indicates, some of the nation's most coal-dependent states face dramatic price increases for electricity without a Cap & Trade mechanism in place. One cause is the de-regulation of electrical utilities, a process begun while Congress was also busy deregulating the financial industry. More recently, investments in new coal-fired plants became a contributing factor, as did price increases in the best grades of coal. What's with coal-state congressional delegations resisting and warning us about the dangerous impacts of Cap & Trade?These electricity rate increases, already in progress, came about on the watch of some of today's climate-bill opposing politicians. If that bill does pass the US Senate this September, it will provide a convenient scapegoat for politicians, once their constituents start screaming loud enough about the increased cost of electricity. More on that down the page.
Don't blame natural gas prices for the utility rate hikes. Natural gas prices have been falling since the economy tanked, as shown in the graphic. (The fall in gas prices is a one reason why utilities across the USA have tabled proposals to add coal-fired electricity capacity. Gas makes more sense.)
Conclusion and examples.
Even if the meager Cap & Trade provisions included in the energy bill now under consideration by the US Senate were stricken, consumers in coal-dependent states would be facing serious electricity price increases. Let's look at some examples.
Due to deregulatory decisions made years back - a future removal of the so-called rate cap - Pennsylvania anticipates a steep rate increase beginning in January 2010, in the range of 45% to 100% (depending on who is making the projection). Ouch.
North Carolina faces a similar rate boost. The Electric Power Supply Association points out that:
Electricity rates for most North Carolina customers could increase 50 – 100 percent if Duke Energy and Progress Energy proceed with plans for $35 – 40 billion in new utility-built power plants, according to a report released by the North Carolina Waste Awareness & Reduction Network (NC WARN).West Virginia, another coal-dependent state faces a similar situation:
West Virginia customers of American Electric Power subsidiaries Appalachian Power and Wheeling Power could see a 43 percent increase in their power bills over the course of the next three years.Remember all of the cited examples are before Cap & Trade, and in some cases are significantly larger than the cost impact projections estimated by USEPA, for Cap & Trade provisions of the climate bill! Virginia, another big coal state, has a slightly less intense problem.
Dominion Virginia Power customers saw their monthly power bills jump $16 in July 2008, after the State Corporation Commission approved an 18 percent rate increase. The rate hike is the largest one-time rate increase in three decades.Think building new coal-fired electricity plants in Kansas is a good idea?
In early September 2008, Kansas City Power and Light filed for a $257.5 million increase in base rates with the Missouri Public Service Commission and the Kansas Corporate Commission. If approved, average residential customers in Missouri and Kansas can expect to see a 17.5% increase in electricity bills, resulting in monthly increases of $13.89 and $12.57, respectively.Tennessee, another highly coal-dependent states is experiencing a 20% increase:
The Tennessee Valley Authority’s biggest rate increase since 1974 went into effect in October 2008, as customers began to see a 20 percent increase in their monthly electricity bills. The average residential home can expect to pay between $15.80 and $19.80 more per month, an increase TVA attributes to rising coal and natural gas costs. This is the second rate increase TVA customers saw in 2008, following a 7 percent increase last April.Shifting now to a state on the lower side of the cost impact range, Wisconsin:- From the Milwaukee Journal Sentinal comes this example:
The deepening recession is slowing sales of electricity more than projected, so the Milwaukee utility is asking the state Public Service Commission for a bigger rate increase to cover the gap.
Under the new proposal, residential electric bills are forecast to rise 7% in 2010, up from an earlier forecast of 4.9%....We Energies says higher rates are needed to continue paying for the coal-fired power plants under construction in Oak Creek as well as higher transmission line and pension costs.
Note: the cited increases are years before any possible requirement for carbon capture and storage is in place, and not including the significant costs of cleaning up fly ash lagoons and controlling mercury emissions.
There are additional examples of electricity rates in coal dependent states. But, I think you see the pattern by now.
What will these rate increases lead to, politically?
One thing you know for certain is that Congress-critters of both parties, the Think Tanks, and the talk show hosts whose-names-you-know will try to blame the EPA first, and the new energy bill later, should it be passed and signed, for cost increases that have nothing whatsoever to do with them, respectively.
Another thing we can be sure of is that politicians will learn how to make a career of pledging to cut electric bills, once their constituents start complaining loud enough. Democrats too, as in this example, headlined in the Washington Post:- Electric Rates No Bright Spot for O'Malley as Election Nears
As rallying cries go, it was a Democratic candidate's dream: Martin O'Malley, the big-city mayor fighting for working families, would stop a 72 percent jump in utility rates for customers around Baltimore and some of the Washington suburbs. As governor of Maryland, he said in his 2006 campaign, he would appoint regulators who cared about consumers -- not the corporations he claimed were on Republican Gov. Robert L. Ehrlich's side.The really bad news.
Once this trend becomes national news, expect Congress to lose it's climate mojo completely...until there is a climate catastrophe that makes electric bill increases pale by comparison.
Consider this post a stake in the ground. We'll be coming back to it again and again.
More posts on coal-dependency.
Coal-Loving Missouri Senator McCaskill Doesn't Think Strong ...
Common Eco-Myth: The Whole United States is Dependent on Coal ...
Missouri Said "No" To 8 Billion Dollar Nuclear Power Plant ...
Quote of the Day Dept: Jeff Biggers on Coal
Who Is Talking Crazy About the Climate Bill? ...
Big Coal Scare Tactic: South Carolina Utility Claims 50% Increase ...