Who Can Pay the New Cost of Electricity?

This is an excerpt from an article in the Wisconsin Energy Coop magazine highlighting the future cost and demand for electricity. Obama says he wants to destroy coal generation of electricity in this country and he says he won't allow nuclear generation of electricity as well.

Why?

WISCONSIN ENERGY COOPERATIVE NEWS

In lean times past, American kids got used to the idea of finding necessities—fewer toys and more practical gifts like socks and underwear—under the Christmas tree. This season, as they look ahead to sobering energy challenges, America’s electric cooperatives are asking a new administration and a new Congress to support policies that will rejuvenate the economy by ensuring that its growing energy requirements can be reliably met.

As businesses owned and governed by their members, electric cooperatives have a long-standing obligation to keep a safe and reliable supply of electricity flowing at a price consumers can afford. In recent years, however, outside pressures have started to chip away at the ability of co-ops to fulfill that commitment.

“We’re facing major issues as we talk about our energy, our future, and what’s going to happen over the next decade,” says Glenn English, CEO of the National Rural Electric Cooperative Association (NRECA), the Arlington, Va.-based service arm of the nation’s 900-plus consumer-owned electric co-ops. “For all Americans to enjoy safe, reliable, and affordable electric power, electric co-op members need to be engaged in a campaign to convince elected officials to focus policy decisions on the critical issues that make up achieving long-term energy solutions—those involving affordability, technology, and capacity.”

A major factor influencing affordability is the cost of new generation coupled with dramatic increases in electric demand. A projected 2.6 percent average annual load growth for electric cooperatives through the year 2030 exceeds the U.S. electric utility average of 1.1 percent, and it works out to almost a 90-percent increase over present consumption.

For electric co-ops to meet that level, new base-load generation capacity must be built. Yet, costs for building new power plants have skyrocketed. Worldwide economic growth has created a bottleneck for even basic construction materials such as steel, cement, and crushed stone. As a result, the average cost of building coal and nuclear power plants in North America is up a full 130 percent from 2000, according to a study by Cambridge Energy Research Associates and the consulting firm IHS, Inc.

“That means a coal plant that would have cost $1 billion to build in 2000 would cost $2.3 billion to build today,” English remarks.

English adds national energy policy decisions made today will determine whether electric co-ops can “keep the lights on” down the road—and if the standard of living for all consumers will decline.