NCPA - National Center for Policy Analysis


April 22, 2009

Consumers already are starting to feel a modest pinch in their electric bills.  The impact is expected to grow in the next few years as utilities accelerate their investments to meet state quotas requiring a portion of clean energy in their generation mix, says USA Today.

The cost is one reason electric rates have been fairly stable as oil and natural gas prices have plunged.  And until recently, clean energy didn't noticeably affect rates because it accounts for just 3 percent of U.S. power generation. That's changing as utilities scramble to meet state quotas, says USA Today.

Among rate increases:

  • In Arizona, Tucson Electric Power has raised rates 4.5 percent, about $4 a month for an average customer, the past 2 years to fund new solar power to meet state quotas.
  • In Oregon, Portland General Electric is seeking a 2.3 percent rate increase to raise the annual $41.3 million needed to fund construction of a big wind farm.
  • In Texas, the prices Austin Energy pays for wind power have more than doubled because of strict state renewable quotas that drive up demand and high costs to deliver wind energy from West Texas.
  • California has among the highest electric rates, partly because it requires 20 percent clean energy by 2010, and with the most accessible green power tapped, Southern California Edison is spending $2 billion to build lines to deliver wind energy from remote areas.

Even though renewable energy is deemed a bargain, wind power is 30 percent more costly than natural-gas-fired energy.  But, green energy is still widely supported to fight global warming.

High fossil fuel prices or an anticipated cap on power plant carbon emissions could make clean energy competitive with conventional electricity, says USA Today.

Source: Paul Davidson, "Consumers start feeling higher costs of clean fuel," USA Today, April 19, 2009.

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