What happens when your utility is 68 percent dependent on coal?
American Electric Power said Thursday it must raise electricity rates 45 percent for its nearly 1.5 million customers in Ohio over the next three years, to cover soaring coal prices and the cost of modernizing its systems to keep them reliable …
AEP executives acknowledge that the increases will be tough on consumers already facing high gas and food prices during a slumping economy.
“The fact is that coal has doubled in cost in the last year alone, dramatically affecting AEP Ohio’s costs,” Joe Hamrock, AEP Ohio president and chief operating officer, said in a statement. “The tools given to us by the State’s new energy plan allow us to phase in those fuel price increases over time so that unlike the spikes Ohioans see in so many products, AEP Ohio’s rate increases are spread out to be made more affordable.”
Note to AEP Ohio — other than gasoline, what are the “so many products” that Ohio consumers ever see rise 45 percent in three years? Answer — not bloody many.
Now it is inescapable that under McCain’s energy and climate plans, the entire country’s electricity rates and bills will soar for several reasons:
- First, McCain supports a cap-and-trade system. That raises coal prices significantly, and coal generates 50 percent of US electricity.
[Yes, McCain and his advisors have been running away from a mandatory cap as fast as possible to appease conservatives while hoping the media and independents don't notice, but I naÃ¯vely believe that McCain as president would flip-flop-flip back to his original position.]
- McCain’s energy and climate plans include no substantial energy efficiency efforts. Indeed McCain now repeatedly mocks energy efficiency. Energy efficiency is the only strategy that can keep energy bills from rising in the face of rising rates. Efficiency is the only major source of 24/7 power that is far cheaper than current electricity prices — and five times cheaper than new nuclear, coal, and natural gas plants.
- McCain’s climate plan relies heavily on shoving 45 new nuclear plants down the throat of the American public by 2030. Yet even AEP’s CEO Michael Morris announced last August that the company was not planning on building any new nuclear plants because they are too expensive and take too long to build: “I’m not convinced we’ll see a new nuclear station before probably the 2020 timeline.” Indeed, new nuclear plants are so expensive they are likely to provide electricity at some 15 cents per kilowatt hour — or 50 percent higher than average retail electricity prices in this country. Progress Energy said earlier this year that the twin 1,100-megawatt plants it intends to build in Florida would cost $14 billion, which “triples estimates the utility offered little more than a year ago.” And that doesn’t even count the 200-mile $3 billion transmission system the utility needs, which brings the price up to a staggering $7,700 a kilowatt. Under Florida law, to pay for these nukes, Progress Energy can raise the rates of its customers a $100 a year for years and years and years before they even get one kilowatt-hour from these plants. Something all Americans can look forward to under president McCain.
- But won’t McCain’s support for next-generation coal with carbon capture and storage save us? Well, if existing, already-paid-for coal plants are forcing a 45 percent rate hike, you can imagine how much the price of new, traditional coal plants must be soaring. What about next-generation coal? One very good source of apples-to-apples comparisons of different types of low-carbon electricity generation is the modeling work done for the California Public Utility Commission on how to comply with the California’s Global Warming Solutions Act, online here. The research for the CPUC puts the cost of power from coal gasification with carbon capture and storage at 16.9 cents per kWh — almost double current electricity prices.
- McCain, like virtually all conservatives, has consistently voted against efforts to advance renewable electricity. Wind power may be the only form of new generation with large-scale near-term potential whose cost is comparable to existing national electricity rates and thus much cheaper than new coal or new nuclear. The Bush Administration itself believes 300,000 MW of wind is possible by 2030 for about 6 to 8.5 cents per kilowatt hour, unsubsidized (i.e. no federal tax credit) and including the cost of transmission to access existing power lines within 500 miles of wind resource. Oilman T. Boone Pickens told me we could have 200,000 MW in 10 years. Solar baseload (also known as concentrated solar thermal power) is probably going to be the lowest-cost carbon-free new generation available 24/7. Utilities in the Southwest are already contracting for power at 14 to 15 cents per kWh. The modeling for the CPUC puts California solar thermal at 12.7 to 13.6 cents/kWh (including six hours of storage capacity) — and at similar or lower costs in the rest of the West. Again, too bad that, contrary to all of his TV ads and public statements where he claims to support “all of the above,” McCain in fact has been a strong opponent of renewable energy.
The bottom line is that McCain’s policies would ensure soaring electricity rates and bills for Ohio and the entire country.