Darn (?), the Price of Electricity is Dropping

Let’s go back a month.

Rising world energy prices, spurred by demand from India and China, will make wind energy off Rhode Island’s shores a viable economic option, Governor Chafee told a group of Washington County town planners and officials Thursday night.

Fast forward to today’s ProJo.

On Thursday, the state Public Utilities Commission unanimously approved an across-the-board rate decrease for National Grid’s 482,000 customers that will go into effect April 1.
For residential customers, the standard offer rate — or the price of power without any surcharges factored in — will plummet 26 percent, from 9.4 cents per kilowatt hour to 6.9 cents.

Oops. The Deepwater Wind project just got even more unviable.
Of course, Governor Chafee is not the only person misguidedly looking for such rate increases, whether for power or at the gas pump. Advocates acknowledge that green fuel sources only “work” if fossil fuel sources achieve a certain quite elevated price point.
In the real world, far from being quietly crestfallen at the announcement yesterday from National Grid, most people will be only too happy to funnel the savings, however modest, from lower power costs to savings, other household bills or frivolities; i.e., to more productive uses.
Funny how what’s good for consumers is bad for green energy. Isn’t that a major red flag about the wisdom and practicality of this (heavy quotes) “industry”?

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Bill
Bill
10 years ago

But the Chafee administration will realize that the price reduction in electricity can and should be effectively nullified by the addition of a higher tax on electricity — in the amount of the price reduction. People have become used to the current higher electric rates; therefore, the new taxes won’t be noticed!
Perhaps the Chafee administration will eventually establish a tax czar — one who automatically imposes a higher tax on any commodity whose market price declines.

dave
dave
10 years ago

I believe the scam was that they start at a high rate of 20 cents/kw and GUARANTEED that the rate will increase 3% every year, for 20 years. Ending at about 48 cents/kw.
The Deepwater contract also stated the venture capitalists profit is guaranteed no matter how cheap Narragansett Electric gets the rate down by using Natural Gas from the US.

Ken
Ken
10 years ago

Of course National Grid can lower the price of electricity from 9.4 cents/KWh to 6.4 cents/KWh because it is not purchasing diesel fuel generated electricity. It’s being generated by cheaper natural gas and nuclear. But wait, the swing of the bat is coming and you Rhode Island rate payers will hear the sound of a homerun being hit by National Grid and Deepwater Wind! RI has bought into a Trojan Horse trying to be the first in the nation and is now locked in with Deepwater Wind at 24.4 cents/KWh in the first year (subject to annual escalations of 3.5% over 20 years) plus the extra cost (which has not been determined yet) of the underwater power cable and onshore electric grid interface both at Block Island and South County plus the extra needed equipment to smooth out the power fluctuations that will trip out power-grids meaning Block Island Power & Light Company will still need to keep its diesel generators in standby mode. Those higher extra costs will now be passed on to all state-wide rate payers once the cable is connected to National Grid in South County. Because of very high rate-payer cost my state and state-wide electric company closed down the first national attempt to construct an offshore wind farm in the middle of a national whale sanctuary by Grays Harbor Ocean Energy Co. LLC of Seattle, Washington which is piggy-backing onto Deepwater Wind’s Block Island project. Their web site still lists the Hawaii Penguin Bank as a viable project but it is a totally dead project especially trying to charge 20 cents/KWh when the diesel generator cost to produce electric is 10 cents/KWh. The only wind farms you’ll find in HI will be on land and we are tying the islands together with undersea electric distribution… Read more »

bella
bella
10 years ago

Maybe the prospect of competition from wind power woke National Grid up. That’s certainly a positive development for homeowners and businesses.

Ken
Ken
10 years ago

Bella,
Your statement; “Maybe the prospect of competition from wind power woke National Grid up. That’s certainly a positive development for homeowners and businesses.” makes no sense!
The only thing National Grid did was to wake up and understand a way to stick it to the Rhode Island rate payers! Under RI law National Grid has to purchase the power from Deepwater Wind which is now about 4 times the going rate of 6.9 cents/KWh they are currently paying for power and oh by the way, most AR contributors are totally against state employees and teachers receiving a 3% retirement COLA; National Grid gets a 3.5% compounding COLA every year for the next 20 years on top of that 24.4 cents/KWh they are going to factor into each RI rate payer rate which should end up at approximately 48.6 cents/KWh or more after 20 years (about 7 times more than what you are now paying for electricity)!
I don’t see any positive development for homeowners and businesses in RI.

joe bernstein
joe bernstein
10 years ago

bella is one of those drones the left loves.She hears a word like “green”or “diversity”and starts salivating like one of Pavlov’s dogs.
It doesn’t have to make sense as long as it has the right politically correct label.

jparis
jparis
10 years ago

lol. I’ll give you a better reason: how about supply and demand? You guys have got to stop jumping on a market fluctuation as proof-of-concept that green energy sources aren’t viable. “How is National Grid able to do this? The simple answer is that the power purchased by the company is cheaper this year. It actually hasn’t been this cheap since 2004, when the standard offer rate was 6.7 cents per kilowatt-hour. Part of the reason for the decrease is likely due to the price of natural gas. National Grid gets about a third of the power it provides Rhode Island from natural gas-fired power plants in New England. The price of natural gas plummeted in 2009 to a seven-year low, according to ISO-New England, the independent, not-for-profit corporation that oversees the distribution of electricity throughout New England. It came up slightly last year, but nowhere near where it once was, and has stayed steady through the first three months of this year.” So a commodity price fell to a seven year low in 2009 (mostly because people STILL don’t want LNG in their back yards) — and the fine folks at National Grid have finally decided to cut us a small break two years later? Oh, let me thank them for their table scraps! Also, nice job skipping over the bottom of the article, in which it is specifically stated that the price drop was in part, due to an *overestimation* in the price of Renewable Energy Certificates: “The company purchases the power from sources all over the Northeast through what are known as Renewable Energy Certificates. It uses money raised from the renewable-energy surcharge to purchase RECs. In 2010, the certificates were cheaper than National Grid had projected, so it finished the year with a $5.5-million surplus in… Read more »

Ken
Ken
10 years ago

Jparis,
There is nothing wrong with off shore wind farms and I am not against them however, there is a way to make alternate energy (green energy) blend in and fit into the particular environment. What is happening in RI with Deepwater Wind is it is being rammed down people’s throats whether they like it or not at a price that is unsustainable.
A proper fit for Block Island would be Ocean Power Technologies (OPT) PowerBuoy® system which extends 14 ft. out of the water and looks like normal navigational buoys. The anchoring system is environmentally friendly. These buoys can be daisy-chained into any electrical power configuration plus wave action is more constant than wind power so the power is more predictable.
This system has been tested in Europe, NJ and HI. In HI the Navy has it connected to the normal power grid and is very happy with the results for over a year now.
The PowerBuoy® are cheaper than the offshore wind turbines and platforms, for maintenance they can be floated back to shore, no landscape blight plus in MW configuration the selling purchase power agreement price is about 11 cents/KWh.

Tommy Cranston
Tommy Cranston
10 years ago

Hey Ken-how is that $4.30 a gallon gas playing in America’s most expensive state?

jparis
jparis
10 years ago

@Ken: I agree with your first statement on principle pretty darned well. But then the rest of your post is spent pushing a little hard for a singular technology, eh? Isn’t this what people are upset about with Deepwater?
There are completely different environmental factors to take into account when looking at a wave-based energy system, not the least of which being local marine life impact studies, anchoring feasibility studies, and life-cycle impact studies. Then there’s your cited 11 cents/KWh, which obviously wouldn’t be set by anyone other than the distributor / carrier. This is not an area of policy I’m unfamiliar with.
Deepwater has an agenda as well to be sure, but I’ve seen as many positive and negative studies dealing with both offshore wind and wave power.
To say that any home-grown energy technology should be developed to the exclusion of others is the type of picking winners I don’t think government should be involved in either. At this point, I agree that all safe options at various levels of development should be explored.

jparis
jparis
10 years ago

@Monique: I’ll do my best to clear my stance up for you, sorry. My point was that market fluctuations will continue to happen, and that we shouldn’t make long-term energy portfolio decisions based upon those fluctuations. Are we on the same page there? When it comes to green energy technologies, we DO need to look at market forces, and realize that not only is more R&D funding required to improve the cost and efficiency of these technologies — but that it may take some government intervention to protect common goods the market doesn’t really care about (dependence on foreign oil, environmental concerns, not exporting all our manufacturing to China) to allow a new and relatively untested technology to have a chance to flourish. Good Example: Government (DARPA) helped create the Internet, we all know that… a common good no singular corporation could have handled. Bad Example: Government also invested heavily in corn-based ethanol… in essence picking a winner for the market, when that “winner” is actually highly inefficient and not particularly environmentally friendly. So hopefully that draws a distinction? As to your second point: Can you cite something about your Spain comment? I don’t dispute what you are saying about cost AT ALL by the way — but I don’t think producing photovoltaic cells and wind turbines here in the U.S. could “kill jobs” as you say. I don’t think we should pay the entire premium at all, and I think Americans should be given the choice as much as possible as to where their energy comes from. That’s fair, right? I put forth that our energy infrastructure, natural resource security, and environmental health are common goods. Disagree? Please let me know why. As such, I think the government should absorb some of that difference in price in the *short… Read more »

Ken
Ken
10 years ago

Jparis, I mention the Ocean Power Technologies (OPT) PowerBuoy® system as an alternative to building near shore 300 ft. to 400 ft. offshore wind turbines. As far as the local marine life impact studies, anchoring feasibility studies, and life-cycle impact studies all have been accomplished in HI in accordance with the National Environment Policy Act (NEPA). The project study of the PowerBuoy® system resulted in a finding of no significant impact (FONSI), which is the highest such environmental rating. The results of this study are included in a draft Report to Congress being prepared by the US Department of Energy titled “Potential Environmental Effects of Marine and Hydrokinetic Technologies”. OPT also achieved the World’s First Lloyd’s Register Certification for Utility Scale PB150 Wave Power Device. As far as the purchase price agreement 11 cents/KWh price, that is the suggest price OPT has posted on their web site in comparison to other alternate energy systems. State of HI is a designated live testing center in partnership with the US Department of Energy. There are all sorts of systems in various stages of test or commercial installation here including the only place in the nation where General Electric Co. is testing real-time the smart grid in a populated area with an alternate energy wind farm connected to the grid. State of HI Clean Energy Initiative requires a mix of alternate energy systems to obtain the goal of reducing state-wide imported oil 70% by year 2030 (40% alternate energy and 30% energy efficiency). Already of the 8 islands some are up to 40% reduction utilizing alternate energy. Tommy Cranston, HI is very proud to have the highest fuel prices in the nation. Average is around $4.30/gal in Honolulu but my bank gives out discount cards so I pay around $4.03/gal. Oahu is where… Read more »

joe bernstein
joe bernstein
10 years ago

J Paris-the entire climate change debate has become so politicized that it’s becoming impossible who is disseminating accurate facts and who isn’t.
What particularly concerns me is the targeting of Western industrialized countries as opposed to the “wink,wink,nod,nod” attitude taken by the international climate cchange gurus towards Brazil,Madagascar,Indonesia,China,etc-we could run up quite a list.
The actual pollution doesn’t have a political component-it’s just dirty.
Now,even if climate change has occured to the extent that the left wing groups like the “concerned scientists’you’ve mentioned claim,the causation is anything but clear.
There are always changes occuring in and about the planet as the result of it’s very fabric and it’s unlikely mankind can assert control.
Nowadays a lot of things are politicized to the point that reasonable discussion is moot.

BobN
BobN
10 years ago

JParis perpetuates the Leftist myth that government created the internet. It did no such thing. That’s like saying that Government, not John Browning at Colt’s, invented the 1911 pistol because the Army paid for the contract, or that NASA created the Saturn V rocket.
Government did none of those things. The Internet was invented by scientists at Bolt, Baranek and Newman (BBN) under a DARPA contract.
And if we had a genuinely free market in electricity instead of a government-run monopoly regulated by the slow and clumsy PUC process, the price decreases due to lower input costs would appear much more quickly.
Competition is the solution, not central planning. This has been consistently proven by the experience of every command-and-control economy in history, most colorfully by the very Marxist governments that JParis and his allies look to as the role models for America.
Thanks, but we’re not having any, and Americans are about to puke back up the Marxism you’ve force-fed us to date. You might want to stand out of the way when that happens.

jparis
jparis
10 years ago

@Joe: The conclusion you seem to draw from the politicization of climate science seems to be “we should give up”. Sorry, but I can’t accept that answer. I also defend the assertion that UCS bases its climate stances on hard science, not politics. Also, the comparison between the U.S., with its decades of technological growth over Brazil, India, etc. is erroneous.
@BobN: lol myth? I’m sorry — did DARPA NOT fund huge computing labs in major universities across the country? I acknowledge that the government agency didn’t DIRECTLY make the research breakthroughs, but they did, in large part fund them. Nice word twisting.
Free competition when oil, gas, and coal all have billions of dollars in advertising and lobbying money, plus gigantic infrastructure investments — well, it’s a hilarious concept to be completely honest.
And I also don’t like your insinuations that I’m a Marxist.
Or VERY SPECIFICALLY your veiled threats about what will happen when “Americans are about to puke back up” what I’ve “force fed them”.
This will be my last response to you on this forum. I hope the moderators are watching, because this is part of the reason the left and the right can’t engage in intelligent debate.
Ken and Monique and Joe all engaged me on points… thank you for being adults.

joe bernstein
joe bernstein
10 years ago

J Paris-Yes,we’ve been involved in technological progress longer than than India and Brazil,but that doesn’t absolve them of responsibility for being mindless about destroying environmental resources.
I took an environmental science course in the early 70’s,some time before the debate became so heated.At that time the US was well into reducing pollution in the air and water.
Some major environmental legislation had been enacted and results haven’t been bad so far.
Anectdotal:Iwas in Pittsburgh in 1967 and again in 2007.
It seemed like a totally different city.
I moved to Chicago in 1976=driving in through “steel corridor”of NW Indiana and the south side of Chicago was like smoking a stogie in the car.
When I moved back east 8 years later there was a noticeable difference.
Europe,both east and west burns lignite to produce power.
It’s almost as dirty as peat and it destroys people and their environment.
The US has only one lignite-burning powerplant-it’s in Texas.
I think we’ve done a good job comparatively.
It has cost us jobs and productive industry in the process.
Just saying that slogans and boilerplate positions aren’t the best way to address the environmental issue.
BTW I didn’t say “give up”-I just can’t figure what and who to believe anymore.

jparis
jparis
10 years ago

@Joe: As to your first point, certainly not — I just think it means that we need to help them out, specifically in terms of increased technology transfer — far moreso than has been discussed to date from our side during the failed Doha Round of WTO talks. That’s the price we’d have to pay to get them on track ecologically, we’d have to give up our superiority on a number of technologies — and that’s a tough sale to the American people even I’m willing to acknowledge. And I’m VERY glad you don’t want to give up… I misread you. That you can’t figure out who and what to believe in politics anymore is (I think) a trait shared by many if not most thinking people, both liberal and conservative. That’s why I do my very best to focus on the science. Being younger than you, I still have a lot to see and learn… but on a recent cross-country road trip I found West Virginia coal country to be not nearly so “wiped out” as some leftist groups would have you believe. But, by the same token, strip mining as a practice is still ongoing in this country — and it does awful things to the environment that have been researched and confirmed ad-nauseum. So I know we need coal for the foreseeable future and that our overwhelming focus on anthracite is a very good thing. But I also know that Carbon Capture and Sequestration (CCS) is a *dangerous* joke of a public relations campaign though — we have no idea what man-made pockets of carbon could do to our rock strata over long periods of time. Believe the science. Read the science. Have science nerd friends interpret the science for you if need be — but go… Read more »

joe bernstein
joe bernstein
10 years ago

J Paris-strip mining definitely is harmful to the environment but at least we don’t have to see families tortured by cave ins.
Most of it out in the the middle of nowhere anyway.
I have a German language photojournalism book I picked up in the Netherlands around the late 90’s-it has some really incredible images of environmental damage done by the old USSR.The book had no political point at all(I’m halfass literate in German)but it was more like cinema verite.Scary stuff.

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