Tuesday, November 13, 2007

That Self-Satisfaction Drive Gets Cheaper to Operate

by Tom Bozzo

Headline in the Capital Times:
MGE Gets Rate Hike Approval
Wisconsin Public Service Commission press release:
PSC Reduces Rate Request For MGE Customers
Reaction in my household:
Yip-yip-yippee! Our rates are going down!

While MGE is indeed raising its rates for plain old electrons a little (by about 0.5 cent/kWH), it's reducing the premium for zero-marginal-carbon electricity a lot (1.7 cents!). Since we have been getting 100% wind power under the old program, we'll see a fairly substantial electricity rate decrease.

Madison being Madison, MGE's clean power program was fully subscribed even at the 2.68 cent/kWH premium. Local readers should note that with the premium down to one cent as of the new year and more wind power supply coming online, this is a relatively cheap way to do something nicer for Ma Nature.

The reduction in the clean electricity premium was reportedly driven by reductions in wind power generation cost. This raises the prospect that in finite time — thanks to internalization of the external environmental cost of conventional power generation or other factors — it'll be the dirty power that's high-cost. From the Kunstlerian emergency theory perspective, the issue is not so much electricity cost as prospective supply constraints. Fortunately, there's a fair amount of low-hanging fruit on the demand side (lighting, vampiric electronics). JHK would note that 10-20% of current demand and $4 will get me an unsustainable latte, especially to the extent that the "plan" is to add a fair amount of the energy usage of Happy Motoring onto electricity demand. Can't hurt, though.

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I've never been able to figure out the idea that "dirty" power costs more, unless you're talking providing a RoC for a sunk cost. From a generating POV, it's a lot easier to catch wind or sunlight than it is to burn petrol, even independent of residual costs.

Delivery issues may be another story, but the "clean premium" appears to be more "because we can" than "because they cost more."

In a deregulated, competitive market—oh, sorry, I forgot for a moment we're talking about no-longer-public Utility companies. Never mind.
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