Energy Producers Boost Price, Lower Reliability, in the Name of ‘Fighting Climate Change’

  • Written by Dr. Jay Lehr & Tom Harris
  • Energy producers plan to replace inexpensive, reliable coal-fired power generation with costly, unreliable wind power
  • In the 18 states where coal provides the lion’s share of electricity, 15 of those 18 states have electricity prices below the national average.
  • Mined and burned with the latest pollution control technology, coal is both clean and safe.

You would think energy producers would always be looking for ways to lessen the costs and increase the reliability of power for their customers. This is not the case, however, with several American energy producers who are now taking advantage of the climate scare to try to force their customers to pay more. They are doing this through unnecessary conversions away from dependable, inexpensive coal-fired electricity generation to unreliable and costly wind and solar power. The Wisconsin-based utility, Alliant Energy, which provides electricity to about 960,000 customers in Wisconsin and Iowa, is a case in point.

Dr. Jay Lehr
Tom Harris

Alliant plans an 80% reduction of its carbon dioxide emissions by 2050 by closing all of its coal-fired power plants. Coal currently produces 33% of the utility’s electricity. On April 11, an Iowa Utilities Board public meeting was held to address Alliant’s short-term plan to close some of its coal power plants and replace them primarily with wind power. Alliant has petitioned the Board for a 25% hike in its base electricity rate to pay for the switch to wind power.

Approximately 60 people attended the meeting, about a dozen of whom spoke, all of them in opposition to the rate hike (primarily senior citizens saying that they could not afford higher power costs).

Alliant Energy executive Terry Kouba claimed at the meeting that fuel-cost savings achieved by switching from coal to wind power will mean customers will pay ‘merely’ 17% more in electricity costs rather than 25%. Alliant also claimed customers will eventually save money from the proposal, as year-after-year fuel-cost savings will eventually cover the upfront cost of building and emplacing new wind power equipment.

In his public comments at the meeting, James Taylor, Senior Fellow, Environment and Energy Policy at The Heartland Institute, an Illinois-based free-market think tank, pointed out that in the 18 states where coal provides the lion’s share of electricity, 15 of those 18 states have electricity prices below the national average. Kansas, Michigan, and Wisconsin are only three states where prices are above the national average. Wind power is the reason why these three states have electricity prices above the national average. Kansas has the second highest percentage of wind power in the country, while Michigan and Wisconsin are two of the five fastest-growing states for wind power.
Taylor told the meeting that Iowa wind power generation has grown five-fold during the past decade, much faster than the national average. As a result, while national electricity prices were essentially flat during the past decade (rising less than 1% per year), Iowa electricity prices rose 31% during the past decade.

Taylor also explained that, although Iowa still enjoys electricity prices below the national average – because coal still provides most electricity in the state – Alliant’s proposal would push Iowa electricity prices above the national average. Moreover, the new rate hike – on top of the 31% rate hikes already imposed by wind power – would result in a greater-than-50% increase in electricity prices due to wind power in the past decade.

Coal-fired power station Werdohl Elverlingsen Germany. Photo by Dr.G.Schmitz.

Taylor challenged Kouba to sign a contractual guarantee that Alliant would reduce its rates at least 25% within the next 15 years to back up his claim that customers would eventually save money under the Alliant proposal. Kouba declined to do so. The Board will issue a decision on Alliant’s proposal later this year.

A similar situation has developed in other states where electric utilities are planning to try to replace coal plants with wind and solar largely as a result of climate change concerns. For example, the Northern Indiana Public Service Company (NIPSCO) submitted a plan to the Indiana Utility Regulatory Commission (IURC) to replace the electricity from two large coal-fired power plants with wind, solar and battery back-up, reduced demand, and power bought from other utilities. Dr. H. Sterling Burnett, Heartland senior fellow on environmental policy comments:

“While NIPSCO claims its move will save ratepayers more than $4 billion over the long run, the utility is requesting IURC approve a 12 percent rate increase to pay for the transition. Based on Energy Information Administration data, I calculated NIPSCO’s plan would cost the average Hoosier household an additional $164 per year for electricity.”

Taylor’s question at the January 28, 2019 IURC hearing discussing NIPSCO’s plan was priceless, “In what Alice-in-Wonderland universe does NIPSCO save consumers $4 billion by raising each household’s electricity bill more than $100 per year?”

This must stop. Coal has huge advantages as a fuel—it is abundant, inexpensive, easy to burn, easy to store and transport, packs a great deal of energy, and power plants can be built in a variety of sizes. And America is blessed with 22.1% of the world’s proven coal reserves, the greatest of any country and enough to last for about 380 years at current consumption rates. Mined and burned with the latest pollution control technology, coal is both clean and safe. Its time to end the war on coal.
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Dr. Jay Lehr is Senior Policy Analyst with of the Ottawa, Canada-based International Climate Science Coalition (ICSC) and former Science Director of The Heartland Institute. Tom Harris is Executive Director of ICSC and a policy advisor to Heartland.

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Tom Harris

Tom Harris is Executive Director of the science-based, non-partisan group, the International Climate Science Coalition (ICSC).
http://www.climatescienceinternational.org

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