The cost of energy conservationby Jonathan DuHamel on Dec. 13, 2011, under Energy
One would normally expect that if we use less of a commodity we would pay less. But in the perverse world of government mandated energy policy, conservation costs us more.
A case in point: As a result of Arizona’s effort to boost renewable energy use and energy efficiency, we are using less natural gas. That puts Southwest Gas in an bind. They contend that with lower usage, they are unable to recover fixed costs to provide service. Southwest Gas and other utilities are therefore urging the Arizona Corporation Commission to allow the utilities to impose a surcharge to gas customers, that is, allow the utilities to “decouple” charges from actual usage. That policy will, of course, cost ratepayers more. Not a good incentive for conservation.
We are already paying the cost of renewable energy mandates for electricity. The Arizona Corporation Commission, in its benighted wisdom, requires electric utilities to produce an increasing percentage of electricity from much more expensive renewable sources due to fear of the phantom menace of global warming.
Tucson Electric Power Company notes that in 2011 it collected an extra $36 million from ratepayers to pay for renewable energy installations (mainly solar), and that in 2012 it expects to collect an extra $44 million in ratepayer money for these projects.
The Arizona Corporation Commission is not serving the public with these policies. It is mandating that we produce electricity from more expensive and less reliable sources. To put that in perspective the Energy Information Administration calculated the costs of electricity generation in dollars per megawatthour as follows:
Conventional coal power: $100.40; Natural gas: $83.10; Nuclear: $119.00; Onshore wind power: $149.30; Offshore wind power: $191.10; Thermal solar power: $256.60, Photo-voltaic solar power: $396.10. Note also, that the availability, i.e., the ability to produce electricity on demand, according to EIA, is 85% for coal, 87% for natural gas, 90% for nuclear, but only 34%-39% for wind, and 21%-31% for solar.
I urge the state legislature to take the power of issuing mandates away from the Commission and repeal the renewable energy standards. That way utilities will be free to seek more efficient and cost effect ways of providing electricity.