During his 2008 presidential campaign, then-Sen. Barack Obama promised that his energy policy would cause Americans’ electricity prices to “necessarily skyrocket.” Well, count this as one promise kept.
Last week, the U.S. Energy Information Administration reported a significant drop in power sector coal consumption. According to the report, coal-fired power plants are now generating just 36% of America’s electricity. Just one year ago, coal accounted for 44.6%.
According to Fox News’ Phil Kerpen, the drop is the result of “an unprecedented regulatory assault on coal that will leave us all much poorer.”
Last week PJM Interconnection, the company that operates the electric grid for 13 states (Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia) held its 2015 capacity auction. …
The market-clearing price for new 2015 capacity – almost all natural gas – was $136 per megawatt. That’s eight times higher than the price for 2012, which was just $16 per megawatt. In the mid-Atlantic area covering New Jersey, Delaware, Pennsylvania, and DC the new price is $167 per megawatt. For the northern Ohio territory served by FirstEnergy, the price is a shocking $357 per megawatt.
Why the massive price increases? Andy Ott from PJM stated the obvious: “Capacity prices were higher than last year’s because of retirements of existing coal-fired generation resulting largely from environmental regulations which go into effect in 2015.” Northern Ohio is suffering from more forced coal-plant retirements than the rest of the region, hence the even higher price.
These are not computer models or projections or estimates. These are the actual prices that electric distributors have agreed to pay for new capacity. The costs will be passed on to consumers at the retail level.