De-Facto Energy Policy

Congressional actions, rulings by the Courts and lawsuits by environmental organizations have created a de-facto energy policy for the United States.

The de-facto policy is to eliminate all inexpensive methods for generating electricity and replace them with the most expensive methods for generating electricity.

The end result of this policy is to increase the cost of electricity for industry, thereby resulting in the loss of jobs to countries having low-cost energy.

Expensive electricity also means much higher costs for families.

The lowest cost method for producing electricity is Hydro, especially from small dams along rivers. Hydro also is pollution free.

The next lowest cost methods for producing electricity are coal-fired power plants and natural gas combined cycle (NGCC) power plants.

Hydro is threatened by environmentalists who want to tear down dams, including the large dams in the Pacific Northwest. There is for example, a concerted effort to tear down the dams along the Fox River in Illinois, even though some of these dams could produce hydro electric power at around 2 cents per kWh.

Ultra-supercritical coal-fired power plants produce electricity with little environmental damage, but are being opposed by environmentalists.

Low-cost NGCC plants are threatened by the possibility of onerous regulations on fracking.

Long-term NGCC plants are also threatened by any cap and trade legislation that puts a price on carbon. NGCC plants emit CO2 and at some point the cost of those emissions would become onerous. Based on proposed legislation, a $10 price on carbon in 2012 becomes a $200 dollar price in forty years.

The cost of electricity to families resulting from the de-facto energy policy could be twice or three times what they are paying today. A $200 per month electricity bill becomes a $400 or $600 per month bill in the future.

Median family income is around $50,000. A $400 per month bill for electricity will represent nearly 10% of income.

The de-facto energy policy favors wind and solar. The cost of building these plants on a per KW basis adjusted for capacity factor is two to ten times more costly than building ultra-supercritical power plants. The cost differential is even greater for NGCC power plants.

While the cost of wind and sunlight is free, high construction costs, together with related back-up costs for supplying electricity when the wind doesn’t blow and the sun doesn’t shine and for building extra transmission lines, results in much higher prices for electricity.

The only way to change the de-facto energy policy is for Congress to remove the impediments for building low-cost power plants and also eliminate the basis for lawsuits.

We need not have a carbon-constrained economy that kills jobs and hurts families.

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