How Will Clean Energy Legislation Affect Electricity Prices?

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How Will Clean Energy Legislation Affect Electricity Prices?As debate heats up around the proposals for clean energy legislation in Congress, one of the main points of contention is the amount of money it will cost.  More specifically, everyone wants to know how the average American household will be impacted by the respective energy bills in the House (Waxman-Markey’s American Clean Energy and Security Act) and the Senate (Kerry-Boxer’s Clean Energy Jobs and American Power Act).  This article will investigate the change in energy prices one can expect from legislation that could be passed within the coming months, and try to sift through the wide discrepancy in figures that are being tossed around.  Then some recommendations will be presented as to how energy usage can be reduced, to preempt any anticipated rises in cost.

How much will it cost?

How much more money per year should a typical American household expect to pay if clean energy legislation were to pass?  Depending on where one gets their information from, this figure varies hundreds of dollars!

It helps to learn where the information is coming from.  Analyzing the House’s proposal, the U.S. Government’s Environmental Protection Agency found that, “the overall impact on the average household, including the benefit of many of the energy efficiency provisions in the legislation, would be 22 to 30 cents per day ($80 to $111 per year).” Meanwhile, the Congressional Budget Office estimated the cost to be about $175 per household.  On the other hand, an August report by the conservative Heritage Foundation claims that “a typical family of four will pay, on average, an additional $829 each year for energy-based utility costs” after the passage of Waxman-Markey.

Although it may be difficult to agree on how many more dollars Americans can expect to pay from clean energy legislation, nearly every study concurs on one fact – we can expect energy prices to increase in the future with the passage of a clean energy act.  For anyone in the country paying utility bills, from homeowners to property managers to retail owners, this means they can expect to see their electricity prices rise.

So what should we do?  Fight legislation?

Hardly.  Aside from ecological and health arguments for reducing greenhouse gas emissions and mitigating global climate change, there would be catastrophic impacts on the world’s economy were we to proceed at our current pace of fossil fuel consumption.  In fact, most scientists argue that we need to take much more drastic and strict measures at combating climate change than even the more ambitious proposals worldwide are suggesting – meaning many feel that the House and Senate acts would not go far enough in reducing greenhouse gas emissions.  Thus, fighting any attempt at curbing greenhouse gas emissions (such as stymieing clean energy legislation or not participating in international climate talks) is near-sighted and irresponsible, because of the enormous toll we would be placing on our future’s environment and economy.  The current House and Senate proposals may not be perfect, but they are a step in the right direction – so let’s not let the perfect be the enemy of the good.

A better solution: Energy efficiency!

A better solution: start using less electricity and less energy as we make the shift from fossil fuels to renewable energy.  The best way to do this is by reducing energy demand and using energy more efficiently. How does one do that?

A good place to start is with an energy audit of a building, which analyzes the energy usage of a building and recommends measures to improve efficiency.  These are often done for free or at a discounted rate by a utility company.  Another option is to hire a certified Home Energy Rater, who typically use high-end equipment to thoroughly diagnose a building’s efficiency.  It is up to the user to implement the recommend improvements once the audit is complete.

Another recommendation is to have the systems of the building commissioned.  Commissioning entails hiring a commissioning agent to come inspect elements of the building – such as the HVAC system, lighting, water heating – and make sure they are all operating at maximum efficiency and as they were intended to do.  Then the agent will make the adjustments to correct any deficiencies and have the systems running at optimal performance levels.

For a larger building or commercial space (such as an office or retail store), one can attempt to implement an overhaul in operations and management that will demand less energy use by the individuals occupying the space.  There are several programs that exist which provide guidelines for instituting these changes, which include such recommendations as switching to more efficient appliance to informing building occupants about energy-saving techniques.

In any approach, it is important to use the tools and information available and put them to use.  Whether this is the latest in IT or simply common sense that should be shared, applying intelligence to our system of energy consumption will reap huge rewards.

[photo credit: photonburst]

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9 Comments

  1. “Although it may be difficult to agree on how many more dollars Americans can expect to pay from clean energy legislation, nearly every study concurs on one fact – we can expect energy prices to increase in the future with the passage of a clean energy act. For anyone in the country paying utility bills, from homeowners to property managers to retail owners, this means they can expect to see their electricity prices rise.”

    This statement infers that doing nothing will yield to no increase in energy prices. That assumption is incorrect and should be accounted for. Very poor work by the author.

    • You are absolutely correct. The cost of inaction I would imagine is far far greater than the cost of action. If we consider how much it would cost to deal with sea level changes, upgrading levies, increased forest fires, increased flooding, loss of farmland, increase in mosquitoes and pests, more heat-related death and illnesses, increased cost of future oil, etc., I would venture to say that we would actually see a net negative cost with climate change legislation.

      It’s called global climate change for a reason. It’s global. We can’t just evaluate this by looking at our right hand while forgetting about our left hand. We have to look at the whole picture. Climate change affects virtually every aspect of life. How much more would energy prices rise once oil becomes more rare? How about the cost of dealing with Katrina-type hurricanes and California fires multiple times every year?

    • The author and everyone else knows that energy prices will go up with time. The author is saying that in the short term energy prices will be even higher if legislation is passed. I am all for strong legislation on this issue but stop trying to make points that are not there. Authors write with a certin trust that readers have a basic understanding of how the world works. They don’t need to spell out things that any able minded indivdual should already know or infer.

  2. I heard that in the 70s or 80s the government pushed for electric companies to provide free energy audits for their customers. With very low participation rates (in the ones, percentage wise) where was the benefits? the author’s suggestions are interesting but needs much, much more information about how to get the public to participate. Will rising electricity prices follow the trend set by gas and car sales?

  3. If coal fired power plants are replaced with nuclear, your electric bill will go DOWN 30%. If coal fired power plants are replaced with wind and solar, your household electric bill will go UP by $10,000/year to pay for batteries.

    Reference books:

    “Power to Save the World; The Truth About Nuclear Energy”

    by Gwyneth Cravens, 2007

    Finally a truthful book about nuclear power.

    “Environmentalists for Nuclear Energy”, by B. Comby order from: http://www.comby.org/livres/livresen.htm

    Nuclear fuel is recyclable and should not be wasted.

    • Asteroid,

      I thought I was from outer space. If nuclear is so cheap, why did Wall Street shut it down last century? Have you forgotten the bondholders losing their shirts on nukes? Remember the nuclear financial disasters in Washington State and Long Island? Have you seen the cost overruns, billions, at the recently constructed nuke in Finland? Wake up. Long lead times kill nuclear construction projects. Too much risk.

      Wind is now cost competitive with new natural gas. That is why all the western states are building more and more.

      • Unfortunately, there is no single solution. Wind cannot handle the baseload needs of the grid. The greatest energy demand occurs when the Wind is least likely to be blowing (hot summer days). Due to its low variable operating expenses, Nuclear is the ideal technology to provide the 24-hr base loaded energy to the grid. Solar and Wind can be utilized to provide as much renewable energy as possible, but unfortunately cannot be relied upon to provide energy when it is needed most. Natural Gas units (both simple and combined cycle) can be used for peaking. Depending on the price of coal and future cost reductions, clean coal technology with carbon capture can even play a part.

        Overall, the point I’m trying to make is that we can leverage developments across all technologies to provide different pieces of our energy solution. It is unrealistic to think that we can solve our energy problems with only additions of renewable technologies.

  4. Dealing with the energy grid over the past few years, I have seen many many things, both good and bad in the field. Our Grid system as a whole is horrible and we do need to rectify the situation. If we think that the government is not going to utilize the power grid much like it does with the gas industry we are crazy. As far as he coal fire plants, the generation companies are all but bankrupt, due to the mass purchasing of power brokers and horrible business decision over the past 20 years. Now is the time to reorganize and dedicate ourselves not only in the power grid system but in areas such as nuclear, fossil, wind, wave and all the other types of power generations. Instead of dubbing one source king, maybe we should look to develop multiply sources and a regional strategy for all of them.

    In answering the authors question, ” How will clen energy legislation affect electricity prices?” It will effect them tremendously: let me ask you a questions. Has anything the government has ever done not cost you in the short or long term?

  5. Clean energy legislation is good it will benefit the planet and the energy companies will have a frame work for future development.

    But the cost will be passed on to us …the consumer.

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