Monday, December 10, 2007

No Nukes? Then What?

In the Times yesterday, Peter Applebome asks what do those of us concerned with climate suggest we use instead of the non-greenhouse gas energy that nuclear power plants produce if Indian Point shuts down, as New York State (which just a few years ago owned Indian Point) now wants. One answer, as he implies, is that we use a lot less energy -- that is, we conserve. But could Sam Wells be right when he says, here, that conserving energy will cost us more money?

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Anonymous Bryan said...

Tom,
Lots of meaty stuff in these last few posts. I see a convergence of ideas between Sphere and Energy Outlook (not to mention numerous Peak Oil blogs).

Sam's link is a good place to start....

Whether it's broken out in electric bill or not, you pay for energy (in kWh) and for the power plants that produce the juice (capacity) and the transmission and distribution (T&D) system that gets it into the house. The energy portion of the bills covers the kWh the utility buys from electric generators and/or it pays for the coal, oil or natural gas used to fire the generators. More or less, the more energy you use, the higher the energy portion of the bill and vice versa (at least down to the minimum charge).

You can't have electric service unless you have the power plants and transmission lines in the first place. The capital cost of these items, and the cost to maintain them and replace them are the other component of the electric bill. These costs are more or less fixed. They don't change based on the energy consumed unless more power plants have to be built to satisfy the demand for power.

On LI, at least for LIPA residential customers, the charges include an energy charge for the kWh used and a power-supply charge. Now, it gets confusing because the power-supply charge is based on the amount of kWh consumed, but that's only a convention to distribute the cost of building and maintaining the plants and T&D infrastructure in an arguably fairer manner compared to charging every customer equally, regardless of how much energy they use.

If a single consumer does the right thing and conserves energy, while his or her neighbors don't bother to, the neighbors will end up paying a greater share of the fixed costs and the energy-saver will pay less. If EVERYONE starts saving energy, the fixed costs still have to be paid and it's conceivable that everyone will pay the same amount to cover the fixed costs while they pay less for the energy portion, to reflect their lower energy consumption. You would hope that the lower amount paid for energy would offset the higher amount for fixed costs, but there's no rule that says it must work out that way. With the cost of living increasing, the fixed costs go up even if energy prices go down.

In fact, some of the fixed costs are fixed for many years. LI residents will be paying for their recent energy requirements for decades, regardless of how much they save. Former LIPA grand poobah Richard Kessel was allowed to sign numerous contracts for power plants and capacity to "keep the lights on." Some of these contracts have 20 years to go on them and LIers pay whether the plants and capacity are needed in the future or not.

That's how it works for most LIPA customers. If you're a business customer, you have the added component of a demand charge, which address not only how much power (plant capacity) is needed, but when it is needed.

Other places don't show separate energy and capacity charges. You are charged strictly based on kWh. But the fixed costs still have to be covered, so the unit price might increase or at least stay the same as less energy is consumed.

At the risk of stating the obvious, we're all still better off using less energy.

7:54 PM  

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