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The high cost of rampant environmentalism

Big Muddy rancher

Well-known member
Posted At : October 13, 2009 12:15 PM | Posted By : Warren Causey
Related Categories: Customer Care, Asset Management, Regulatory & Legal, M & A, Financial, IT, Electric Vehicles, Industry Structure, Energy Trading, HR, Risk Management, Billing & Bill Payment, Carbon Trading, Clean Power Investing, General

I was in a conference session and a gentleman from a utility in the Netherlands was making a presentation. During his presentation, he casually mentioned that there is the equivalent of a 60-cent (U.S.) tariff (tax) on each kilowatt-hour of electricity. After many of us in the audience picked our chins off the floor, we asked him if he was serious—he was. That certainly explains how Netherland can afford so many windmills. Of course those windmills only provide about 15%-20% of the power the Netherlands needs. But if electricity costs more than 60 cents per kilowatt hour, your utility industry can afford to build a lot of things.



In the United States, the cost of electricity ranges between about 4 cents per kilowatt hour in the Southeast, up to about 15 cents per KWH in California. Add 60 cents per hour to that and you have a pretty good idea where all the money will come from to build out AMI nationwide and force the utility industry off coal-fired generation. Even that may not be enough.



I’m at another conference today, in California, and at a breakfast meeting with several of my industry analyst peers, we all compared notes and pretty much were in agreement that the technology to develop a smart grid, and wean the nation from carbon-based fuels generally exists today (although there is no practical way to sequester carbon dioxide—which appears to me to be another windmill-tilting exercise, a la Don Quixote). We all agreed that this can be accomplished over 20 to 30 years. But the costs will be high, at least what the Dutch are paying now, probably more.



Just as a for-instance, if your average electric bill is about $200 per month as mine is when averaged across 12 months—I live in the Southeast, in the 4-cents-per-KWH region with lots of coal-fired generation—with a 60-cent-per KWH tax, my bill would go to $3,000 per month. And I’m just average.



A new EcoAlign survey is out today. In it, “31 percent of Americans believe that the ‘environment’ will benefit the most from smart grid investments. On the other hand, consumers thought that government, residential consumers and utilities would benefit the least from smart grid investments.” The survey also determined, “When asked about motivations to use new energy technologies or participate in energy programs enabled by smart grid, approximately two-thirds of Americans describe themselves as ‘cost-conscious saver’ or ‘value buyers,’ emphasizing price as a primary determinant of purchasing decisions.”



The cost of rampant environmentalism at the federal government level is going to be extremely high. I’m not sure those costs are something average Americans understand or are prepared to deal with. If cap-and-tax is enacted and those prices start being imposed by federal fiat, I consider a consumer revolt as a distinct possibility.


http://www.energyblogs.com/Causey/index.cfm/2009/10/13/The-high-cost-of-rampant-environmentalism
 
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