Get Ready for High-Cost Electricity

CascadeNewLogoBy John A. Charles, Jr.

During Oregon’s month-long legislative session earlier this year, the big environmental “win” was Senate Bill 1547, a bill that was hatched in secret by two large utilities and a group of environmental activists. The bill promises to rid the Oregon electricity grid of coal-fired power and to double the required levels of “renewable energy” from 25 percent to 50 percent by 2040.

When the legislature was debating SB 1547, members were calmly assured by proponents that the cost of these requirements would be minimal. They were reminded that the existing standard of 25 percent (by 2025) had always included an “off-ramp” if the cost of compliance reached 4 percent of utility revenue—and the costs had never come close to 4 percent.

Indeed, compliance costs for PGE in 2014 were only 0.24 percent of revenue (or $4.2 million in dollar terms). Obviously, ratepayers had nothing to worry about.

This storyline was especially soothing when it was repeated by Sen. Lee Beyer, former member and chair of the Oregon Public Utilities Commission. In his grandfatherly way, he told his colleagues that everything was under control.

The problem with this narrative was that it’s highly misleading. What the advocates didn’t say was that the reason the cost of compliance so far has been low is that utilities only needed to get 10 percent of their power from designated renewable energy sources through 2014. However, from 2015 to 2019, the requirement jumps to 15 percent, and rises steadily after 2020.

No one actually knows how much it will cost to get 50 percent of the power from “green energy” sources by 2040, but it’s going to be expensive.

We get a hint of this in the PGE forecast for 2017-2021. For those five years, PGE predicts that compliance costs will total $335 million, or 3.46 percent of revenue. Those costs will have to be paid for by ratepayers, and they will get nothing in return.

Under SB 1547, the highest costs are back-loaded. Advocates know that when the program blows up a decade from now, it will be someone else’s problem. Many of the legislators who voted for it will be sitting poolside collecting their PERS checks.

Senate Bill 1547 is a fraud. Virtually every claim made by proponents is false. Instead of increasing our “energy security” by making the Oregon grid “coal-free,” it will dramatically increase the risk of power failure by force-feeding huge amounts of intermittent sources like wind and solar into the grid. In engineering terms, the electrical distribution system requires stability; SB 1547 mandates volatility.

System costs have to rise because consumers will be paying twice for the same power—once for the subsidized wind farms and again for the adult power sources used to back up the wind farms that sit idle most of the time.

The advocates also claim that SB 1547 will get coal out of the system by 2030; but Oregon’s only coal-fired power plant will be shut down in 2020 anyway. The notion that this bill will affect coal used in other states is laughable.

In his floor speech, Rep. Cliff Bentz summarized his criticism of SB 1547 by saying it was “long on symbolism, short on results, and really expensive for ratepayers.” Nonetheless, a majority of legislators voted for it, and the governor signed it.

Ratepayers deserved so much better. In 2017, repealing SB 1547 should be at the top of the legislative “to-do” list.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Posted by at 05:00 | Posted in Economy, Energy, Environment, Global Warming, Oregon Government, Oregon Senate, State Government | Tagged , | 53 Comments |Email This Post Email This Post |Print This Post Print This Post
  • bifford

    But Knute Buehler hopped into bed with the Democrats to vote for this fake greenie law that won’t reduce pollution but will give a windfall to PGE and PP and L …..resulting in massive increases in your electric bill.

    • Knuter d’applause B4 bytin’ N2

      Be Knute Buehler a RINO – or, at beast… an abominationale greenie libtard encased in vinyl?

  • Dick Winningstad

    Hmmm….. given that hydro and nuclear is verboten in the renewable calculations the cost of electricty will probably double. There is no way solar cells or geothermal or whatever will actually replace coal or gas generated electricty.

    • DavidAppell

      Renewables are already cheap compared to fossil fuels, once you factor in the huge negative externalities done by the latter.

      Do you really think you are paying those costs now? Or do you think your fuels cost only what appears on your monthy bill?

      • Dick Winningstad

        What negative externalities? And what are the costs?
        You dodged the absence of hydro power and nuclear power. Why?

        • DavidAppell

          “Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use”
          National Research Council, 2010
          http://books.nap.edu/catalog/12794.html

          • Dick Winningstad

            And the externalities of higher energy costs will do damage too. Such as more death due to no heat control in (poor) homes.

          • DavidAppell

            Generating electricity with coal creates more damage than value-added.

            That is, coal-fired electricidty SENDS THE ECONOMY BACKWARDS.

            So any energy source with damage < value-added is better than coal.

            "Environmental Accounting for Pollution in the United States Economy," Nicholas Z. Muller, Robert Mendelsohn, and William Nordhaus, American Economic Review, 101(5): 1649–75 (2011).
            http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.5.1649

            Summarizing that paper's findings: for every $1 in value that comes from coal-generated electricity, it creates $2.20 in damages.

            Total damages: $70 billion per year (in 2012 dollars).

          • guestus augustus

            Bagwan with ye, prithee moma krill anand shilla Appelldee. Goon, take a flyin’ friar to moon marshall Asslwipe on his way to the scars.

          • Dick Winningstad

            Interesting paper. and in the end the authors say they can not calculate all the benefits/costs. For tinstance, the benefits from electricity in terms of lighting houses, running businesses and communications are not calculated. The authors said that total costs were on the order of $184 billion. A small number when the total GDP, $14 trillion, is considered and that energy/mining use is a huge contributor to that GDP.

          • DavidAppell

            “For tinstance, the benefits from electricity in terms of lighting houses, running businesses and communications are not calculated.”

            Wrong.

            They are all included. Because the authors take the value of fossil fuel-powered anything at the market price of the fossil fuels.

          • Dick Winningstad

            No. The authors missed the utility of that energy use in increasing the GDP. Again a $14 trillion GDP compared to 184 billion of external costs ignores the uses that energy is put to in generating economic activity.

          • DavidAppell

            “The authors missed the utility of that energy use in increasing the GDP.”

            Wow, you don’t understand the first thing about this paper.

            The authors took the value of fossil fuels at the prices they sell for on the markets.

          • DavidAppell

            It’s cute, Dick, the way you think you know more than professional experts who study this stuff for a living, and that you think you can find errors in a few minutes that somehow bypassed these experts who took months to research and write this study.

            This is exactly why you’re a denier, Dick — you will not accept anything that does not support your prejudices, no matter what. You MUST find a way to dismiss any such evidence, even if, like now, you have to make it up out of whole cloth.

            The worst is that you know you aren’t being honest.

            You know you do not stack up to these professionals.
            You know you are desperate to dismiss their importand findings.
            You know you will not consider them in any way whatsoever.

          • Dick Winningstad

            I am surprised at your filter that only accepts information that supports your view. Usually government funded research conducted to get desired results. And when you see counter information/arguments you write it off as bought off by big oil or whatever. Since you have degenerated to insults have a good day.

          • DavidAppell

            I accept real, legitimate peer reviewed science.

            It doesn’t matter who funds it.

            You only harp on funding because you can’t disprove the science. Whining about funding is about the only recourse you have if you want to maintain your illusions.

          • Robert

            Well put!

          • DavidAppell

            “Usually government funded research conducted to get desired results.”

            Just because you would sell your soul for a government grant does not mean most of us would.

          • Robert

            In Jane Mayer’s Dark Money, there is a chapter on how the ‘debate’ was manufactured and where the money came from. Research? No. PR? Yes. Millions that a tiny portion could have gone to fund research; it was as though they knew that the results would have been more BESTs…..

          • DavidAppell

            Scientists get grants to do science.

            Perhaps YOU would tell the grantee whatever it is you think they wanted to hear, but few of us would be so dishonest.

            Scientists produce science. It is the best way of establishing the truth that humans have come up with, and climate science is no exception.

          • Robert

            Agreed, few sign a grant agreement that discuss the “deliverables”; Mayer discusses those few who have misused their name and position.

          • DavidAppell

            OK. A few people in *any* field misuse their name and position. That doesn’t disprove AGW.

          • Robert

            I’m not trying to say that. I was pointing out that the ‘debate’ was started by monied interests. Mayer covers the PR funding that flowed into think tanks from RW , usually fossil fuel interests to set up doubt about the state of climate science. Most every claim that is clogging the comment threads here, or repeated by Rush L., et al, or put forth in denialist lead Senate Hearings is listed at skepticalscience along with the debunking. Including the ‘gov funding leads to results the govt wants’ bit of rhetoric.

          • DavidAppell

            “For tinstance, the benefits from electricity in terms of lighting houses, running businesses and communications are not calculated.”

            They certainly are!

            If you pay $2.30 for a gallon of gas, the authors assume the value of that gallon to you is … $2.30.

          • DavidAppell

            “And the externalities of higher energy costs will do damage too.”

            Not if the energy is clean.

            “Such as more death due to no heat control in (poor) homes.”

            Any country that lets people freeze in their homes should be ashamed of itself.

          • Dick Winningstad

            In the 60’s and 70’s I can remember walking in Portland and getting a scratch throat irritated nose and watery eyes from the pollution. That is not happening now. Cleaning the last little bit of pollution from our activities will be too expensive. We are at a point of diminishing returns.

          • DavidAppell

            So what?

            Portland still has pollution — and not just air pollution. Benzene, for one.

            That affects human lives. See the NAS report I already provided.

          • DavidAppell

            “In the 60’s and 70’s I can remember walking in Portland and getting a scratch throat irritated nose and watery eyes from the pollution. That is not happening now.”

            Um, Dick…. that is not the pollution that is causing climate change.

            You know that much at least, right?

        • DavidAppell

          “You dodged the absence of hydro power and nuclear power. Why?”

          There were no questions in your comment that I responded to.

          • Dick Winningstad

            Did you miss the original post?
            “Hmmm….. given that hydro and nuclear is verboten in the renewable calculations the cost of electricity will probably double. There is no way solar cells or geothermal or whatever will actually replace coal or gas generated electricity.”

          • DavidAppell

            You still haven’t asked a question.

          • Dick Winningstad

            Renewable energy solutions will fall far short of supplying the energy needs of the country. Especially if you leave out hydro and nuclear power. Why do you think that renewables are a solution?

          • DavidAppell

            “Why do you think that renewables are a solution?”

            Who said I did?

          • Dick Winningstad

            You said earlier: “Renewables are already cheap compared to fossil fuels, once you factor in the huge negative externalities done by the latter.”

          • DavidAppell

            Yes, and that’s true.

            Their externalities are huge. And you’re paying for them.

          • DavidAppell

            “Renewable energy solutions will fall far short of supplying the energy needs of the country.”

            That’s a very categorical statement. Let’s see you prove it.

          • Dick Winningstad

            Renewable energy supplies about 10% of energy use. You will not be able to run a steel plant 0r an automobile plant on solar cells.

          • Dick Winningstad
          • DavidAppell

            “You will not be able to run a steel plant 0r an automobile plant on solar cells.”

            You keep claiming this. But you never prove it, or even try to prove it.

          • DavidAppell

            “Renewable energy supplies about 10% of energy use.”

            Wind + solar is now about 2.% of US energy production.

            The data are here:
            http://www.eia.gov/totalenergy/data/monthly/index.cfm#consumption

            The EIA defines “renewable” energy as hydro + geotherm + solar/PV + wind + biomass

            which does come to about 10% now. But many people do not consider hydro or biomass to be renewable.

          • DavidAppell

            “You will not be able to run a steel plant 0r an automobile plant on solar cells.”

            Why not?

            The electricity still comes into the same outlets on the wall.

          • DavidAppell

            “Especially if you leave out hydro and nuclear power.”

            Hydro is tapped out. But who said I’m against nuclear?

            I’m fine with it, as long as we can bury the waste in your backyard.

            Deal?

  • thevillageidiot

    Ah but it is good to be a regulated monopoly. no accounting for costs just go the PUC and ask and you will receive. no competition either. electrical rates have been increasing annually since the early implementation of the wind projects in eastern Oregon. Most of the wind energy produced in eastern Oregon goes to California, maybe we should purchase it back from Edison et. al and pay for that additional cost as well. then we could be all green except when the wind is not in our favor. currently more than half or Oregon energy is produced by coal fired plants outside of Oregon. Board man only provides a small fraction on its own. converting to nat gas is an excellent alternative considering the US has more nat gas than most of the world. and it is cheaper than any of the alternatives except coal.. but while Oregon voters sleep with their heads stuck in the sand nothing will change. Trying to get off the grid is expensive with out government subsidies. selling it back to the power company really isn’t an alternative since most of what is produced is consumed as it is produced and you get a credit toward using the other more cheaply produced and more consistent energy. bottom line I guess the dems want to punish the poor by making them pay more for their electricity.

    • DavidAppell

      Regulated utility monopolies have a good side — an obligation to provide universal service.

      Without that, half the ranches in isolated eastern Oregon would have to be generating their own power via windmills. And they probably never would have gotten a phone line.

  • oregongrown

    Excellent editorial. All of Mr. Charles assertions are true and show what a completely reprehensible bill this is for Oregon consumers. I call SB 1547 the Utility Monopoly Tax.

    “The advocates also claim that SB 1547 will get coal out of the system by
    2030; but Oregon’s only coal-fired power plant will be shut down in
    2020 anyway. The notion that this bill will affect coal used in other
    states is laughable.” (But forget the pesky details, this makes for good soundbites).

    Compliance Costs- 2014 – .24%, or $4.2 Million Paid By Us
    Compliance Costs- 2017- 3.46%, or $67 Million Paid By Us

    SB 1547 was pushed through in a matter of a few weeks in the short 2016 legislative session. The PUC was shut out of those meetings, but have come out against this for the same reasons quoted in this article. But they didn’t get a say. Neither did we, the people. We just got it shoved down our throats by “our” government. No vote. No cost / benefit analysis. Just like the fluff, Carbon Fuel Tax, another rush job in the short session for billions more, every dollar going out of state, not one dime fixing Oregon roads and by all expert analysis since we found out about it, it will have a imperceptible impact on carbon or air quality.

    “Under SB 1547, the highest costs are back-loaded. Advocates know that
    when the program blows up a decade from now, it will be someone else’s
    problem. Many of the legislators who voted for it will be sitting
    poolside collecting their PERS checks.”

    This is government in Oregon. This deal, like the Carbon Fuel Tax, done in “insider only” secret meetings, in record time, by extreme partisan politicians, who represent not the working people of Oregon, but Big Government. And they have no problem abusing their power.

  • DavidAppell

    Sneakily, John Charles only looks at one side of the equation.

    Coal-fired generation facilities created at least $62B/yr in (nonclimate) health costs in the U.S. (in 2005, in 2007 dollars), according the 2010 report “Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use” by the National Academy of Sciences. That’s 3.2 cents/kWhr, or an average of over $800 a year for a family of four.

    • Another Guest

      DavidAppell, are you concluding we will then be healthier and have lower healthcare costs with this transition?

      • DavidAppell

        Generating power with coal and oil creates more damage than value-added, according to a 2011 study that included noted Yale economist William Nordhaus:

        “Environmental Accounting for Pollution in the United States Economy,” Nicholas Z. Muller, Robert Mendelsohn, and William Nordhaus, American Economic Review, 101(5): 1649–75 (2011).
        http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.5.1649

        Summarizing that paper’s findings: for every $1 in value that comes from coal-generated electricity, it creates $2.20 in damages.

        Total damages: $70 billion per year (in 2012 dollars).

        Petroleum-generated electricity is even worse: $5.13 in damages for $1 in value.

        • BigWaveDave

          As you wage your crusade against the use of natural organic stored solar energy, you can’t even describe how CO2 could possibly cause any physically measurable effect on Earth’s surface temperature or weather.

          Do you ever stop to think what we would do without it, or do you just search for the most negative opinions to share?

          • DavidAppell

            I’ve explained this to you a dozen times now. It’s not my fault you’re too dense to understand it.

    • CB

      “Sneakily, John Charles only looks at one side of the equation.”

      Of course he does.

      He works for renewable energy’s competition. He’s paid to lie about it.

      If the Oregon Catalyst were interested in being taken seriously as a source of news, why would they allow him to prostitute himself here?

      “The Cascade Policy Institute was a co-sponsor for the Heartland Institute’s Sixth International Conference on Climate Change (ICCC6). DeSmogBlog found that 17 of the 43 sponsors of the Heartland Institute’s Sixth International Conference on Climate Change, including the Heartland Institute itself, had collectively received over $46 million from either Scaife Foundations, Koch Foundations, or ExxonMobil.”

      http://www.desmogblog.com/cascade-policy-institute

  • Smokey the Bare

    Question, esp for the Green Appell climate-cysts: Considering the “Population Bomb” is everybody’s baby, where dies the ‘Suck Stop’ considering mechanical contrivances compared to what every breathing, sweating, urinating, flatulent, defecating mammal inhabiting the planet isn’t dumping potentially more crap into the environment?

    Graphically, Mr. D A, how about them apples and to what extent a human race for the cure be more accurately directed?

    As for mechanical contrivances, clean burning facilities like PGE”s
    Boardman Plant a candle in the wind compared the the scrape and rape of South America’s Amazon rain forests.

    Timber me shivers….

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