Los Angeles Times LOS
ANGELES — As temperatures plunged to 16 below zero in Chicago in early January
and set record lows across the eastern U.S., electrical system managers
implored the public to turn off stoves, dryers and even lights or risk
blackouts.
A fifth of all power-generating
capacity in a grid serving 60 million people went suddenly offline, as coal
piles froze, sensitive electrical equipment went haywire and utility operators
had trouble finding enough natural gas to keep power plants running. The
wholesale price of electricity skyrocketed to nearly $2 per kilowatt hour, more
than 40 times the normal rate. The price hikes cascaded quickly down to
consumers. Robert Thompson, who lives in the suburbs of Allentown, Pa., got a
$1,250 bill for January.
“I thought, how am I going to pay this?” he
recalled. “This was going to put us in the poorhouse.”
The bill was reduced
to about $750 after Thompson complained, but Susan Martucci, a part-time
administrative assistant in Allentown, got no relief on her $654 charge. “It
was ridiculous,” she said.
The electrical system’s duress was a direct
result of the polar vortex, the cold air mass that settled over the nation. But
it exposed a more fundamental problem. There is a growing fragility in the U.S.
electricity system, experts warn, the result of the shutdown of coal-fired
plants, reductions in nuclear power, a shift to more expensive renewable energy
and natural gas pipeline constraints. The result is likely to be future price
shocks. And they may not be temporary.
One recent study
predicts the cost of electricity in California alone could jump 47 percent over
the next 16 years, in part because of the state’s shift toward more expensive
renewable energy.
“We are now in an era
of rising electricity prices,” said Philip Moeller, a member of the Federal
Energy Regulatory Commission, who said the steady reduction in generating
capacity across the nation means that prices are headed up. “If you take enough
supply out of the system, the price is going to increase."
In fact, the price of electricity has already been rising
over the last decade, jumping by double digits in many states, even after
accounting for inflation. In California, residential electricity prices shot up
30 percent between 2006 and 2012, adjusted for inflation, according to Energy
Department figures. Experts in the state’s energy markets project the price
could jump an additional 47 percent over the next 15 years.
The problems confronting the electricity system are the result of a wide range of forces: new federal regulations on toxic emissions, rules on greenhouse gases, state mandates for renewable power, technical problems at nuclear power plants and unpredictable price trends for natural gas.
Even cheap hydro
power is declining in some areas, particularly California, owing to the
long-lasting drought. “Everywhere you turn, there are proposals and regulations
to make prices go higher,” said Daniel Kish, senior vice president at the
Institute for Energy Research. “The trend line is up, up, up. We are going into
uncharted territory.”
New emissions rules
on mercury, acid gases and other toxics by the Environmental Protection Agency
are expected to result in significant losses of the nation’s coal-generated
power, historically the largest and cheapest source of electricity. Already,
two dozen coal generating units across the country are scheduled for
decommissioning. When the regulations go into effect next year, 60 gigawatts of
capacity — equivalent to the output of 60 nuclear reactors — will be taken out
of the system, according to Energy Department estimates.
Moeller, the federal energy commissioner,
warns that these rapid changes are eroding the system’s ability to handle
unexpected upsets, such as the polar vortex, and could result in brownouts or
even blackouts in some regions as early as next year. He doesn’t argue against
the changes, but believes they are being phased in too quickly.
The federal
government appears to have underestimated the impact as well. An Environmental
Protection Agency analysis in 2011 had asserted that new regulations would
cause few coal plant retirements. The forecast on coal plants turned out wrong
almost immediately, as utilities decided it wasn’t economical to upgrade their
plants and scheduled them for decommissioning.
The lost coal-generating
capacity is being replaced largely with cleaner natural gas, but the result is
that electricity prices are linked to a fuel that has been far more volatile in
price than coal. The price of natural gas now stands at about $4.50 per million
BTUs, more expensive than coal. Plans to export massive amounts of liquefied
natural gas, the rapid construction of gas-fired power plants and the growing
trend to convert the U.S. heavy truck fleet to natural gas could exert even
more upward pressure on prices. Malcolm Johnson, a former Shell Oil gas
executive who now teaches the Oxford Princeton Program, a private energy
training company, said prices could move toward European price levels of $10.
“When those natural
gas prices start going up again, we will feel it in the way of higher
electricity prices,” warns James Sweeney, a Stanford University energy expert.
The loss of coal is
being exacerbated by problems at the nation’s nuclear plants. Five reactors
have been taken out of operation in the last few years, mainly due to technical
problems. Additional shutdowns are under consideration.
At the same time, 30
states have mandates for renewable energy that will require the use of more
expensive wind and solar energy. Since those sources depend on the weather,
they require backup generation — a hidden factor that can add significantly to
the overall cost to consumers.