Obama Demands Higher Electricity Rates

By Tom Rhodes, 11/28/2011

Obama and his policies are causing residential electricity rates to go up far faster than inflation. While real earnings are dropping or stagnant, and the consumer price index is up by 1.7% the average increase in electricity is as much as 5.1% annually. Electric rates depend on public policy and regulations not fuel costs, not regular operating costs, but the government’s interference.

The Oliver Wyman consulting firm recognizes this and predicts strategies for business because increased electric costs now are adding to “financial strain at the worst possible moment.” Their recent report designed to help utilities states, “There is a growing need to increase electricity prices. These rate increases are largely being driven by environmental, regulatory, and security requirements.” Even though pricing on some fuels, such as natural gas, has declined electricity rates are up an average of 2.7% per year.

The problem is that because of regulations and new Obama EPA rules, coal generated power is becoming cost prohibitive to produce. Required retrofits cannot economically meet existing environmental requirements; this means that good working but older coal-fueled plants must be pre-maturely retired. Existing and proposed EPA rules are having a significant impact on rates—with the vast majority of compliance costs falling on residents. The Wyman report states: “If these are enacted and enforced, the Federal Energy Regulatory Commission staff has informally estimated that 8% of our electric generation capacity, representing 81 Giga Watts of the nation’s generating capacity, will need to be retired.” 81 GW is a huge amount of electricity,

EPA does not technically require shutting down any plant, the rules are such that plants cannot be operated economically. When asked about the about the mass retirements of coal-fueled power plants as a result of EPA regulations, Lisa Jackson, EPA Administrator, said “I can’t say what a business will decide to do. Some businesses are investing in nuclear, some are looking at natural gas. There are states that are leading the way on solar or wind.” Obviously Obama and the leaders he have chosen, like Jackson, don’t see the resultant increases to the average consumer’s electricity rates as their problem.

Obama, the EPA, and Department of Energy’s actions make it clear. They only want new power from Wind and Solar, but they don’t even really want that, what they want is to put the USA at third world status for energy use. Solar and Wind power cost well over 5 times traditional electric generation costs. But the impact of solar and wind are even greater than traditional methods of generating electricity. On average industrial solar parks occupy 50 acres and have a capacity factor of one megawatt. Do some simple math and you will see that to replace the 81GW of coal generated electricity with solar would occupy 4 Million acres of land, and because of the intermittent nature, require 81GW of stand by natural gas turbines. That much infrastructure must be paid for by the people who use electricity, thus expect a 5 to 8 times increase in the cost of electricity.

Wind power is even worse; the industry average is about 17,000 acres to reliably generate 50 megawatts. That means to replace the 81GW of coal generated electricity, which Obama’s EPA’s new rules and regulations will require retiring, with wind power would occupy 27 Million Acres. There is no way environmentalists are going to allow millions and millions of acres of land to be occupied with solar and wind power. The damage to the environment would be devastating.

The cost of the infrastructure will have to be borne by the people who purchase electricity. Power companies only earn about 10% profit, not nearly enough to finance the expansion that the regulations will require; they must to meet Obama’s government regulations increase the cost of electricity. The disposable income for most Americans has shrunk; it is not the market nor Wall Street but rules and regulations that are driving the increase in electricity costs. Obama and the government are increasing energy’s share of people’s disposable income by 12%.

The facts are clear “While the future outlook for electricity rates is largely dependent upon public policy and regulatory decisions, one fact is clear: substantial capital investments are required by the nation’s utilities to modernize the electric grid and meet proposed environmental requirements,” this according to the Wyman report. Those capital improvements must be paid for, power companies do not make excessive profits, 10% cannot be called excessive, so obviously to make the government mandated and not wholly necessary improvements, the money must come from those who purchase electricity, there is no other means than raising electricity rates. Look at history, increased energy costs always lead to slower growth, and lower standard of living.

The environmentalists don’t talk about it but since 1990 the US population rose 22% but our electricity use dropped 2%, no other industrialized country can say that they use less electricity per person than they did 20 years ago. Although not the top per capita consumer of electricity we are among the largest energy users; we are also the leading manufacturer of goods, which takes energy, the leader in research and development in virtually every industry, which takes energy. While remaining the leader in hugely energy intensive activities which benefit the entire world we have managed to decrease our electricity usage. No other country can make such a claim. This is not good enough Obama and the bureaucrats he appoints, they want the US to stop being a leader in everything. They think we have and use too much, have too much prosperity, so want to take from those who work and earn and give to those who don’t.

When you look at your increasing power bill remember it was brought to you not by the power company, but buy the government. When you see the increase in the cost of manufactured goods from the USA, remember it was brought to you by increased energy costs, caused by the government, not the power company or the manufacturer. When you see even more manufacturing moving off shore where the regulatory burden is less, remember those jobs went overseas because of the government. Obama has said and wants the USA to consume less, do less, and have less. Attacking energy and raising its costs is his method.

If you keep putting the same people into office you have been, expect the same results. These results will be more government in every part of your life. From your energy bill going up, to being forced to purchase government approved everything. You have the choice, do not elect anyone who wants to expand government and aren’t calling on reducing the size and influence government has on all people. More and more government always leads to less liberty and freedom, which has historically proven to decrease not increase the overall standard of living for a society.