Higher Energy Prices Are Coming. Energy Shortages Are Coming
“Once real numbers have come out about renewable energy costs, people are having second thoughts,” reported Maureen Masten, Deputy Secretary of Natural Resources and Senior Advisor on Energy to Governor Bob McDonnell, VA, while addressing his “all of the above energy” strategy to meet the state’s energy needs.
The real costs of renewable energy are coming out-both in dollars and daily impacts. After years of hearing about “free” energy from the sun and wind, people are discovering that they’ve been lied to.
On Tuesday, August 14, the New Mexico Public Regulation Commission (PRC) approved a new renewable energy rate rider that will allow the Public Service Company of New Mexico (PNM) to start recovering a portion of its recent development costs for building five solar facilities around the state, a pilot solar facility with battery storage, and wind resource procurements. The renewable rider could be on ratepayers” bills by the end of the month-“depending on when the commission publishes its final order,” said PNM spokeswoman Susan Spooner.
The rate rider currently represents about a $1.34 increase for an average residence using 600 kilowatt hours of electricity per month-or a little more than $16 per year. This increase seems miniscule until you realize that this is only a small part of increases to come. PNM needs to recover $18.29 million in renewable expenditures in 2012 and the rate rider only addresses monies spent in the last four to five months. The remaining expense will be carried into 2013.
Like more than half of the states in the US, New Mexico has a Renewable Portfolio Standard (RPS) that mandates public utilities have set percentages of their electricity from renewable sources. In New Mexico the mandate is 10 percent this year, 15 percent by 2015 and 20 percent by 2020. Most states-with the exception of California (which is 33 percent by 2020)-have similar benchmarks. To meet the mandates, PNM will need considerably more renewable energy with dramatically more expense-all of which ultimately gets passed on to the customer. PNM acknowledges that the rider will increase next year and predicts the total cost recovery for 2013 to be about $23 million. By 2020, based on the current numbers of approximately $20 million a year invested, resulting in a $24 a year increase, consumers’ bills will go up about $200 a year just for the additional cost of inefficient renewable energy.
Had the PRC not approved the special rate rider, costs would be even higher. Typically rate increases are only approved at periodic rate case hearings, usually held every few years. The system of only allowing rate increases after a lengthy hearing, keeps the costs hidden from the consumer for longer but increases costs to the utility and, ultimately, the consumer, due to interest charges on the borrowed money. PNM believes the rider will allow for more “timely recovery of costs,” resulting in a $2.7 million savings.
Environmental groups, who’ve been pushing for the renewable energy increases, opposed the special renewable rate rider and have threatened a potential appeal of the PRC’s decision. It is hard to tout “free” energy when there is a special line on the utility bill that clearly points out the new charge for renewables.
Pat Lyons, Chairman of the Public Regulation Commission, told me that he’d pushed for a year and a half to get the rate rider listed on utility bills: “With the support of the commissioners, ratepayers will now have transparency. This is the first step toward full disclosure regarding the real cost of renewables. Once we have that, maybe we can let the free market work.”
So, renewable electricity is hardly free. It also isn’t there when you need it-like in the predictable summer heat of California.
To meet their 33 percent renewable mandate, California’s utility companies, like New Mexico, have been installing commercial renewable electricity facilities-with wind capable of providing about 6 percent, and solar 2 percent, of the state’s electric demand. But in the summer heat, the wind doesn’t blow much and the solar capacity drops by about 50 percent when the demand is the highest.
Despite increasing renewable capacity and an exodus of the population, California has been facing threats of rolling brown/blackouts due to potential shortages. TV and radio ads blanket the air waves begging consumers to limit electricity usage by setting their air conditioners at 78 degrees and using household appliances only after 6PM. “Flex Alerts” have been issued stating: “conservation remains critical.” “Consumers are urged to reduce energy use,” “California ISO balances high demand for electricity with tight power supplies” and “maintain grid reliability.”
Even with expedited permitting, California cannot build renewable electricity generation fast enough. Environmentalists block construction due to species habitat, such as that of the desert tortoise or the kit fox. If they oppose renewable energy construction, you can imagine the vitriol they extend toward coal, natural gas, and nuclear. There is a big push to shut down nuclear power plants and new natural-gas plants, which are ideal for meeting the needs of “peak demand,” are fought by the very same groups that are pushing electric cars.
San Diego-based, nationally syndicated radio talk show host Roger Hedgecock observed: “Right at the moment in California, building new electricity generating power plants of any kind is politically taboo. Electricity itself is becoming politically taboo.”
Texas has been faced with both increasing costs and fears of shortages. “Concerned about adequate electricity supplies,” the Texas Public Utility Commission recently voted to allow electricity generators to charge up to 50 percent more for wholesale power. The increase is to encourage the building of new power plants in the state with the highest capacity in the country for wind electricity generation.
Apparently new electricity-generating power plants are politically taboo in Texas, too-at least within the environmental community. Instead of encouraging new power plants to be built, Ken Kramer, the Texas head of the Sierra Club, said, “A better idea would be to encourage more energy-saving programs”-perhaps like setting the thermostat to 78 degrees and not turning on appliances until after 6PM.
When will Americans revolt over being forced to use less while paying more?
We know that high energy prices are just the beginning of inflation that raises the cost of everything from food to clothing to manufactured goods. When the cost of manufacturing goes up, industry moves to countries with lower-priced energy, cheaper labor, and more reasonable regulations. Jobs go overseas and we import more. The trade deficit grows, and America is less competitive.
The higher electricity costs are 100 percent due to government regulation and legislation that are unreasonably crushing American businesses and ratepayers-much like the pressure England imposed on the American colonies that launched the American Revolution.
Paul Revere alerted the early settlers-“the Red Coats are coming, the Red Coats are coming”-which brought people into the town square where they joined forces and rallied together. Their cooperative effort was so effective that those early Americans made it so painful for the Red Coats that they abandoned their objective.
People who hear me speak often describe me as the Ann Coulter of energy. Due to the childhood nickname of “Bunny,” my family refers to me as the Energizer Bunny. But today, I feel like the Paul Revere of energy: “Higher energy prices are coming. Energy shortages are coming.”
What remains to be seen is how the citizens of America will respond. Will we gather in the figurative town square and join forces, making it too painful for the use-less, pay-more agenda to continue? Will we force state legislators to abandon the RPS? Will we rally together in opposition to the EPA’s cost-increasing regulations? Will we turn out a president who is more concerned with lining his cronies” pockets than doing what is best for Americans?
Unless the publicly-inflicted pain forces the abandonment of the objective, “Higher energy prices are coming. Energy shortages are coming.”