Utilities Promise Future Savings While Pushing Rate Hikes Today
Climate Change Weekly #320
President Barack Obama repeatedly said he believed human fossil fuel use was causing dangerous climate change. As part of his effort to fight climate change, he prosecuted an unprecedented “War on Coal,” enacting regulations to limit nontoxic carbon-dioxide emissions from power plants, placing a moratorium on new coal mining on federal lands and on certain mining activities—halting mountain-top mining permits, imposing new stream-protection rules, and setting new conditions on the storage of mine waste—and supporting state efforts to prevent coal transport and export expansion.
President Donald Trump takes a completely different view of both climate change and the relative benefits and costs of coal use. Trump has indicated he thinks the science is inconclusive regarding humankind’s impact on climate and that predictions of disaster are grossly exaggerated. In addition, Trump says coal and other fossil fuels remain vital to U.S. economic performance and his goal of energy dominance. Accordingly, Trump ended the federal war on coal, reversing or modifying many of Obama’s restrictions on coal and other fossil fuels.
Unfortunately, that war has been taken up by a number of public utilities with large coal holdings.
Utilities in several states are attempting to run a con game on their respective states’ utility commissions and ratepayers. The con? The utilities claim their plans for prematurely shuttering existing, reliable, relatively inexpensive coal power plants and replace them with expensive, intermittent renewable power sources will save ratepayers money “in the long run.” Meanwhile, they are asking for an immediate increase in electric rates to pay for the transition.
The truth is the long run never comes. Any 10 year old child can tell you someone isn’t saving you money if they charge you more for something you already get for less.
From Indiana to Iowa and beyond, electric utilities with existing coal plants are planning on replacing them with wind power and, increasingly, solar power, the most expensive form of energy outside of battery power.
In late 2018, Northern Indiana Public Service Company (NIPSCO), which provides electric power to approximately 460,000 customers across the state, filed a plan with the Indiana Utility Regulatory Commission (IURC) to prematurely shutter two large coal power plants and replace the electricity with a mixture of solar and battery backup, wind, reduced demand through efficiency and demand-side management programs, and electricity purchased from other utilities.
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. Of course, Indianans will also likely pay more for goods and services, because businesses will pass on their higher energy costs to their customers.
As James Taylor, my colleague at The Heartland Institute, asked during January 28, 2019 testimony before an IURC hearing discussing NIPSCO’s plan, “In what Alice-in-Wonderland universe does NIPSCO save consumers $4 billion by raising each household’s electricity bill more than $100 per year?”
In Iowa and Wisconsin, the story is the same. Alliant energy, a Wisconsin-based utility which provides electric power to approximately 960,000 electricity customers in Wisconsin and Iowa, plans on reducing its carbon dioxide emissions by 80 percent by 2050, by closing all its coal power plants, the source of 33 percent of the electricity the utility produces.
Alliant estimates its plans will lower wholesale electric rates in the Midwest over the long term, but reducing wholesale electric rates does not necessarily translate into saving the company’s business and residential customers any money. As proof, Alliant asked the Iowa Utilities Board for an almost 25 percent base rate increase to pay for new renewable power facilities. With Iowa’s Utility Board having yet to approve Alliant’s plan (it has 10 months to consider the rate hike), Alliant showed extreme chutzpah by imposing a 5 percent base rate increase, a charge the company says it will refund if the Utility Board denies its proposal.
Coal plants can function efficiently for 30 to 50 years, sometimes longer. Wind turbines and solar panels—even if they operate as intended—have less than a 25 year lifespan in general. Even when solar panels are cleaned properly and regularly, they generate less power over time, declining sharply after 18 to 20 years. As a result, years before a more reliable coal plant would cease operating, and before wind or solar facilities are paid off if they are financed over 30 years, the entire array of panels or set of turbines will have to be replaced. When one includes the cost of the very high-priced battery backup utilities propose constructing to provide power for periods when the sun isn’t shining or the wind is not blowing—expensive battery packs which will have to be replaced regularly—it’s obvious any promised cost savings from reduced fuel costs will never materialize.
State utility commissions are charged with ensuring a reliable, abundant electric power supply. Utility commissions and electric power users alike hate electric power brownouts and blackouts, which result all manner of negative consequences. To avoid power shortages during peak periods when demand surges, or as states’ populations grow, or when old power plants are retired, utility commissions guarantee utilities a generous profit margin on the construction of new power plants.
Thus, because utilities are generally guaranteed a profit margin, often 10 percent or more, on every dollar they spend on new facilities, they have a huge financial interest in building expensive new power facilities even when existing ones are working perfectly well. In addition, utilities like NIPSCO and Alliant are rushing to reap the millions of dollars in federal taxpayer subsidies in the form of a 30 percent tax credit for solar equipment and the ten-year per-kilowatt hour production tax credit for wind and solar energy, before they expire.
The move from coal to renewables is not about preventing climate change, and it’s certainly not about about saving consumers money. It’s about using the climate change scare to pad utilities’ profits.
Republicans in Indiana’s House have shown signs they recognize NIPSCO’s plan for what it is, a good old fashioned flimflam. Without a single Democratic vote in support, Republicans on Indiana’s House Utilities Committee passed an amendment to a Senate sewage and water bill to prohibit state regulators from approving any new power plants, power contracts, or changes in electricity generation sources until January 1, 2021. One can only hope this provision becomes law, slowing down, if not halting, NIPSCO’s green energy boondoggle.
If utility regulators refuse to do their jobs and protect consumers from unnecessary rate hikes, one can only hope other states’ legislatures follow the example of Indiana’s House Republicans. If utilities think it’s such a good idea take well-functioning power plants offline before their useful lives end, replacing them with new shiny, expensive, renewable power baubles, let them pay for it out of their own pockets instead of foisting the cost off on ratepayers and taxpayers.
- H. Sterling Burnett
IN THIS ISSUE …
Noted physicist Henrik Svensmark, Ph.D., who leads the Sun-Climate Research group in the
Atmospheric Physics Division of Denmark’s National Space Institute, has published a new study, “Force Majeure, The Sun’s Role in Climate Change,” which reinforces his previous research demonstrating the sun’s dominant role in climate change.
Until the advent of the theory human greenhouse gas emissions were driving the present climate change, it was generally acknowledged in the scientific literature that solar cycles of different length and periodicity were the driving force behind major climate cycles over the past 10,000 years, such as the Medieval Warm Period around the year 1000 AD and the Little Ice Age from approximately 1300 to 1850 AD. Changes in solar irradiance alone do not directly account for large-scale climate changes. There are mediating or amplifying factors, the largest of which is the sun’s effect on galactic cosmic rays, charged particles from interstellar space which end up in our atmosphere and bring about changes in cloud cover. Cloud cover both limits the amount of sunlight reaching the earth and the amount of solar radiation bouncing off the surface back into space.
The research by Svensmark and other scientists shows solar activity continues to play a much greater role in the current climate than the “official consensus,” as represented by the Intergovernmental Panel on Climate Change and many national and international science agencies, recognizes.
Until climate models and the agencies which rely on them accurately account for the sun’s role in climate change, their calculations for the amount of temperature forcing atmospheric greenhouse gases cause will remain in error, resulting in continued erroneous predictions about future climate conditions and gross overestimates of the likely impact of various international efforts to prevent climate change.
SOURCE: Global Warming Policy Foundation
For climate alarmists, even good climate news is bad if it contradicts projections made by proponents of the theory humans are causing catastrophic climate change. Take, for example, their reaction to a new Nature Geoscience study showing Greenland’s fastest-flowing, fastest-thinning glacier, Jakobshavn, on the country’s west coast, has started growing thicker, significantly reducing its contribution to sea level rise. CNN’s headline, “Greenland’s most critical glacier is suddenly gaining ice, but that might not be a good thing,” was typical of the response. Instead of celebrating the increase in glacial mass and the reduced flow of water from Jakosbshavn to the Atlantic—problems headlines have been warning about for two decades—Science Alert, USA Today, and other journals and newspapers now say, in the words of National Geographic’s online link to the story, “A Greenland Glacier it Growing. That’s Not Good News” (emphasis mine).
According to the media outlets, the dark cloud obscuring the silver lining of a major Greenland glacier starting to add ice is the fact that many other glaciers in Greenland are still shrinking. This may be true, but it does not change the fact the most significant glacier is starting to grow, possibly portending an increase for other glaciers in the near future.
What really alarms the alarmists, I think, is that Jakobshavn glacier is defying their predictions of continual, irreversible decline as long as humans continue to burn fossil fuels for energy. The Nature Geoscience study shows, contrary to the claim human greenhouse gases drive climate change, nature still rules the roost when it comes to climate.
According to the team of scientists from the United States and the Netherlands, the glacier is growing primarily because of a shift in the North Atlantic Oscillation (NAO), in which the northern Atlantic Ocean has shifted from warm phase to a cold phase, a change that occurs every 20 or 30 years. The cold phase, which began about three years ago, cooled the Atlantic Ocean, making the waters near the glacier the coldest they’ve been since the mid-1980s.
Is it a coincidence climate change mania began to take hold just after the NAO shifted to a warm phase in the 1980s and scientists began measuring glacial decline?
Reports indicate the Jakobshavn’s growth took the scientists by surprise.
“‘At first, we didn’t believe it,’ study lead researcher Ala Khazendar, a scientist at NASA's Jet Propulsion Laboratory in Pasadena, California, said in a statement. ‘We had pretty much assumed that Jakobshavn would just keep going on as it had over the last 20 years,’” reports Live Science.
The only reason the glacier’s growth took scientists by surprise is because, having drunk the catastrophic anthropogenic global warming Kool Aid, they’d largely forgotten nature’s previously recognized, historic role in dictating climate conditions.