A headline at The Onion, a parody news website, once stated that a new report found “98 Percent Of U.S. Commuters Favor Public Transportation For Others.” The satire made a good point. Many Americans support “environmentally friendly” policies so long as they don’t personally have to deal with the consequences.
This may be the case with alternative energy. In the abstract, the public generally supports wind and solar power. But that support may quickly disappear once consumers feel the resulting hit to their bank accounts.
The Los Angeles Times recently reported, “There is a growing fragility in the U.S. electricity system, experts warn, the result of the shutdown of coal-fired plants, reductions in nuclear power, a shift to more expensive renewable energy and natural gas pipeline constraints. The result is likely to be future price shocks. And they may not be temporary.”
Notably, many of those factors are the result of environmental policies at the federal or state level, or both. The Times notes the price of electricity has already increased by double digits over the last decade in many states, even after accounting for inflation. Greater price increases may lie on the horizon.
Environmental Protection Agency regulations are forcing the closure of many coal-fired power plants, which provide relatively low-cost electricity. Nationally, two dozen coal-generating units are scheduled for decommissioning, shifting power production to more expensive sources. And, as the electric supply declines and demand remains constant or grows, prices will further increase.
Environmental regulations have led more power plants to convert to natural gas. That’s good for Oklahoma energy producers, but it increases price volatility for ratepayers. Natural gas now costs about $4.50 per million BTUs, which is already more expensive than coal. Growing demand for natural gas is expected to drive up prices further. Some experts believe $10 may become the norm.
At the same time, 30 states have renewable energy policies that mandate the use of wind and solar energy. Since renewable energy power can cost up to twice the price of electricity generated by gas-fired power plants, these mandates mean higher consumer rates.
Naturally, California is ground zero for this approach and illustrates the impact on consumers. In California, major utilities will be required to obtain 33 percent of power from renewable sources by 2020. Residential electricity prices in that state surged 30 percent from 2006 to 2012, adjusted for inflation. Now, thanks in part to renewable energy mandates, experts predict electricity prices will increase another 47 percent over the next 15 years, adjusted for inflation.
Oklahoma isn’t among the states with a renewable-energy mandate. But we aren’t immune to the problems identified by the Times. State coal plants are being impacted by EPA mandates; consumers will experience higher rates.
The growth of renewable energy is also affecting Oklahoma’s electric grid — and taxpayers. A new state law will allow utilities to charge alternative energy users a fee to cover associated infrastructure costs. And critics argue that state subsidies for wind power may now total $193 million annually, making them a financial drain on the state.
Thus, the effect of many “green” policies isn’t to create an environmental Nirvana, but to leave less “green” in our wallets and less money in state coffers for things like education.