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Winter cold this year has driven three dozen people a day through the doors of Citizens for Citizens, a social services agency in Fall River, Mass. They arrive worried, complaining of monthly electric bills $30 to $40 more expensive than expected. “The phones are jammed,” Liz Berube, the organization’s assistant director, says of her office. For the 18,000 or so low-income households Citizens for Citizens enrolls in government energy assistance each year, a bill increase of $40 can be a budgetary avalanche.
One client, Chris Kennard—a 30-year-old Air Force veteran and single father—recently put his college studies on hold to look for work and pay off bills that piled up after a divorce. He picked up a part-time, minimum-wage restaurant job, but apartment rent is $580, car insurance $110, and his utility bill’s electric rate doubled between October and December.
Kennard told his 8-year-old son that Santa would be late because their apartment had no chimney. And the boy’s birthday was four days after Christmas: “I literally couldn’t afford to give him presents for either. And it killed me.” He eventually received donated gifts.
Electricity bills have risen dramatically this winter throughout New England, hammering both businesses and low-income residents like Kennard. The region is already the costliest place in the contiguous United States to purchase power. This winter, electricity rates at the largest utility in Massachusetts, National Grid, are roughly 60 percent higher than last year.
Although these extreme price hikes are unique to New England, many energy analysts say Americans throughout the country should prepare themselves for higher electricity costs in the coming years. Utility companies are spending millions of dollars replacing aging brick coal plants with plants fueled by natural gas, and building wind turbines and solar panels. These changes reflect a government-mandated transition away from traditional power sources like coal and toward “green” energy. And utility customers will have to foot the bill.
Coal is America’s top electricity resource, but the U.S. Environmental Protection Agency (EPA) has increasingly punished coal power, forcing energy companies to revamp coal plants or shut them down. Many are building natural gas plants instead: As a fuel for creating electricity, natural gas is more expensive but emits fewer pollutants and less carbon dioxide.
In New England, new natural gas plants have replaced coal power so rapidly that infrastructure hasn’t kept up. Back in 2000, natural gas produced 15 percent of the region’s electricity. In 2013 it produced 46 percent. The gas is cheap and abundant in the United States thanks to the ongoing shale boom, but the pipelines in New England are insufficient to handle the volume of gas needed both to create electricity and to heat homes on cold winter days. As a result, local electricity bills have skyrocketed.
Some businesses say it’s cheaper to turn off their equipment than pay for expensive energy. Madison Paper Industries in Madison, Maine, grinds stacks of logs into 200,000 tons of finely pressed magazine paper each year. But it reduced production and announced temporary layoffs beginning in late January, stung by the high winter electric rates.
Three key factors are making electricity more costly, analysts say: retiring coal plants, wind and solar power, and aging or inadequate infrastructure.
CHUNKS OF HARD, BLACK COAL, pulverized into dust, have long been the mainstay of cheap power. At a 1,023 megawatt power plant in Pardeeville, Wis., co-owned by Alliant Energy, coal dust is blown into a furnace where steam is heated to scalding temperatures. The hot steam spins turbines, creating an electric current that powers lightbulbs, vacuum cleaners, and microwaves for some of Alliant’s 1 million electric customers in Wisconsin, Iowa, and Minnesota.
But for Alliant, the cost of turning chunks of coal into electricity has gone north. Since 2011, the EPA has rolled out major air emissions rules requiring coal plants to install pricey pollution controls. At its Pardeeville plant last year, Alliant installed “scrubber” systems to filter out small amounts of mercury. Across its plants, Alliant expects to spend $1.4 billion ($1,400 per customer) by 2017 to meet air quality rules.
Such upgrade costs must eventually be passed on to customers through higher rates. “We’ve managed to kind of stagger that,” says Scott Reigstad, an Alliant spokesman.
But some coal plants built in the ’50s and ’60s are too old to upgrade economically, and as a result, Alliant is shutting them down: It will shutter at least 10 coal generation units in Wisconsin and Iowa over the next two years. Meanwhile, it has padded its portfolio with wind power, a “green” but more expensive generation source.
What’s happening at Alliant is happening to electricity providers across the nation: Over 72 gigawatts of electrical generation are shutting down because of EPA rules—enough to power every home west of the Mississippi River, according to the Institute for Energy Research in Washington, D.C.
Most shutdowns involve coal plants still in operational condition. It’s like owning a used car, says Daniel Kish, the institute’s senior vice president for policy: “You got a good car, it runs well. Doesn’t get the greatest gas mileage, but it’s already paid for. And the government comes along and says, ‘You have to scrap that car and go out and buy a new one—you’ll get better gas mileage.’”
No one wants dirty air, but many say the EPA’s targeting of coal emissions has amounted to a “war on coal,” with the larger goal of reducing carbon dioxide, which isn’t toxic. Rather, carbon dioxide is a greenhouse gas the Obama administration and many scientists blame for global warming.
This year the EPA is finalizing its so-called Clean Power Plan, a new regulatory scheme aiming to reduce power plant CO2 emissions by 30 percent over 15 years and increase reliance on wind and solar power. The EPA estimates the energy industry will spend $8.8 billion per year to comply with the rule, but the consulting group Energy Ventures Analysis says the cost will be much higher—$177 billion by 2020, increasing a typical household’s energy bill $680 per year.
And all for what? By one estimate, the Clean Power Plan will only reduce global temperatures by two-hundredths of a degree Celsius.
WIND AND SOLAR POWER PRODUCTION is not only expensive, it is also intermittent, only working when the wind blows or the sun shines. In Germany, the government has heavily promoted renewables and mandated the shutdown of the country’s 17 nuclear plants. Predictably, electricity prices in the country have jumped 60 percent. Yet because natural gas is expensive in Europe, and because wind and solar don’t provide the steady stream of power needed to keep the grid stable, Germany is temporarily turning back to the last resource you’d expect: coal.
In 2013 Germany generated more electricity using “brown coal”—a dirty, cheap grade abundant in the country—than in any year since 1990. Germany is even building several new coal plants, projects that are expensive but necessary to keep the lights on.
This paradox of policymaking, along with hefty taxes, means Germans currently pay three times as much as Americans for residential electricity. Says Kish: “If we continue down this road, this is how goofed up we’re going to be.”
Some Texans may have seen a glimpse of that future on Jan. 6, 2014. Early that morning, a “polar vortex” swept down from the Arctic bringing temperatures in Dallas down to 15 F, extremely low for Texas. As millions of people rolled out of bed and cranked up furnaces and electric heaters, electricity demand across the state soared.
At the same time, standby generators that were supposed to kick into gear to meet the demand failed to start: The unusually cold weather caused instrumentation lines to freeze at two major power plants, shutting them both down. Elsewhere, frozen lines, thickened fuel, and ice caused coal and gas plants and multiple wind farms to reduce output or go completely dead.
With too little power in the system, the grid maxed out: At 7:01 a.m., the regional grid operator emailed an emergency alert to customers: “Reduce electric use now. Risk of power outages exist throughout Texas.”
Texas grid engineers almost began cutting power to some neighborhoods, temporarily, in order to prevent a widespread blackout. “We did not have to order rotating outages,” recalls Robbie Searcy, a spokeswoman for the Texas grid operator, ERCOT. “But we did come very close.”
Texas is the top state for wind power, with 8,000 turbines accounting for 8 percent of the state’s electrical generation in 2013. But during that cold Monday morning in 2014, it wasn’t very windy. Texas turbines were only operating at 17 percent of their full capacity at the time, providing just 3 percent of the grid’s available power.
Steven Kopits, an analyst at Princeton Energy Advisors in New Jersey, says the enthusiasm for wind power has deflated. “It’s expensive, it’s hard to balance. You have to hold a lot of capacity in reserve, because sometimes wind doesn’t blow.”
BACK IN NEW ENGLAND, with so many coal plants already closed, residents must embrace the new reality: Half their electricity will have to come from natural gas. In order to meet the high gas demand and lower electric prices, utilities say they need to update their infrastructure, building more pipelines to carry the gas from Pennsylvania, where it is mined.
Although the pipelines are supposed to lower electricity costs, New Englanders will have to help pay for the pipelines’ construction, which could cost $6 billion, through their utility bills. One way or another, they seem destined for expensive electricity—a predicament ultimately caused by the government-enforced decline of coal power.
Meanwhile, those high bills will most sharply affect the poorest. “It’s hard to get by,” says Kennard, who has turned his thermostat down and stocked his pantry with ramen noodles, macaroni and cheese, oatmeal, and peanut butter to reduce expenses. “There are only so many corners you can cut.”