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U S Electricity Prices May be Going Up For Good

Ralph Vartabedian

LA Times

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% 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.”


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