Coal electricity prices: the new gas prices
In the next few years, Americans who have grown accustomed to some of the cheapest power in the world will start to see their rates rise, sharply, mainly because coal is rapidly getting more expensive.
Here’s a preview:
COLUMBUS, Ohio — 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.
"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.
Local electric customers are very likely to see their power bills go up starting Oct. 1, perhaps by the largest margin in 30 years.
On Wednesday, TVA Chief Executive Officer and President Tom Kilgore said that rising production costs will drive up the price it charges local distributors for that power. TVA is allowed to make such fuel cost adjustments quarterly, and this one could increase individual bills by 10 percent to 20 percent, Kilgore said. A 15 percent boost would be TVA’s biggest rate jump since 1977.
That means an extra $12 to $25 charge per month for the average household, he said. Local utilities expect to pass that increase directly on to their customers.
TVA gets most of its energy from burning coal, and coal prices have more than doubled in the United States since December, according to TVA. The utility spent more than $2 billion last year on coal.
After gas prices, electricity bills are probably the most salient energy price indicator for average folk (albeit a distant second), so the current gas price hullabaloo offers a decent preview of what we can expect.
There will be outrage. There will be demands for increased mining. (Mine here! Mine now!) There will be Republican demagoguery on behalf of coal companies (and as a bonus, coal-state Democratic demagoguery too). There will be promises that coal mining and burning aren’t like they used to be, because these days super shiny technology makes them clean. There will be expert testimony saying that coal prices are rising because of structural economic forces that won’t be affected by an uptick in mining; that testimony will be disregarded by the demagogues. Greens and their legislative friends will push back with a scattered, incoherent message that involves half capitulation to mining and half boosterism of alternatives.
How will it all shake out?
Well, let’s wait and see how the gas-price thing goes. That will tell us a lot.