Energy Costs are Rising
By Doug Johnson, Chief Executive Officer, Blue Ridge Electric Membership Corporation
Dramatic increases in energy prices are undermining our nation’s economic recovery and hurting the household budget for many of our members. While we’ve been able to maintain relatively stable electric costs over the past several years, these dramatic increases are beginning to affect us adversely too. Rising energy prices, when teamed with the need for new electric generation facilities that meet tough new environmental standards, will mean increases in your electric bill in the months and years ahead.
As a member-owned electric cooperative, Blue Ridge Electric is committed to looking out for our members’ best interests by delivering reliable electricity at the most affordable cost.
Reliability will become a greater challenge as the industry predicts that between now and 2030 consumer demand for electricity is expected to increase by 30 percent. To meet that, our nation must add over 200 new large base load power plants. However, road blocks—some out of our control, some not—are delaying this required boom in generation construction.
Economic growth around the world has produced record orders for basic construction materials such as steel, cement, and crushed stone. As a result, the average cost of building coal and nuclear power plants has increased by 27 percent over the past year, and is up a full 130 percent from 2000.
A second factor, the need to develop climate change policy, has had the effect of slowing desperately needed power plant construction even further. With uncertainty about policy compliance costs, many financial lenders see the needed plants as too risky and are withholding loans. For example, of 151 new coal plants announced since 2002, only 15 have been built.
Furthermore, issues preventing development of coal and nuclear power facilities are forcing power suppliers to use fuels such as natural gas, which is subject to wide swings in price, to generate electricity. Coal, once an inexpensive fuel, has recently shot up in cost as well. The impact of these mounting fuel issues is being compounded across the country as dramatic electric rate hikes are announced, driven by steady cost increases.
What has been described as a perfect storm—the clash of growing demand, skyrocketing power plant construction and fuel costs, and climate change policy constraints—is a challenge our entire nation faces, including here at home.
At Blue Ridge Electric, we’re closely monitoring and working to control rising costs while striving to protect the environment. In fact, we’ll be announcing later this fall our new initiatives for meeting North Carolina’s Renewable Energy and Energy Efficiency Portfolio Standard (REPS) which will include a major energy efficiency campaign and a significant increase in solar technology utilization.
We’re also fighting to minimize the cost impact of federal legislation currently being discussed by lawmakers so that our members continue to have affordable electricity. After the fall elections, we can expect Congress to resume their debate on a national cap and trade law to limit carbon dioxide emissions. This bill, if passed, will create a substantial new tax on coal generated electricity. This isn’t good news for North Carolina electric consumers since about 50 percent of our electricity comes from coal.
From all of the studies I have seen, energy efficiency, solar, and other renewables will help provide resources for our energy needs; however, at best they will be able to fill only about 10 percent of the increasing need for electricity. And these renewable energy resources will come at a much higher cost than consumers are accustomed to paying.
We will keep you posted on these energy industry developments. For now, the increases we are seeing in all energies and the new REPS requirements will likely cause modest increases in your electric bill in the near term. The other issues, like a federal coal tax, have the potential to give all of us price shock—so stay tuned!
