Not So Fast Mr. Hancock
I like Jay Hancock and respect his wisdom on many things. However, his Sun column about green energy incentives leaves out a lot of why they cost more than they purport to save you.
Thanks to the recently passed federal stimulus bill, Maryland energy grants and a maturation of the alternative energy industry, the incentives to go green in big ways and small are higher than they’ve ever been.Wind-generated electricity is the cheapest in history. Government and utilities will pay for huge portions of insulation upgrades, efficient appliances and solar installations. And anybody can shave $100 off his or her electric bill this summer by letting Baltimore Gas & Electric briefly shut off their air conditioning on the hottest days…
You’ll help the planet, save on taxes, stimulate the economy and reap lower BGE bills.
First, none of these green incentives will “save the planet.” Europe’s alternative energy boom and emissions trading scheme hasn’t reduced carbon emissions one gram. Furthermore, even if all developed nations met their Kyoto targets and held them through the century it would produce a meaningless seven hundredths of a degree change in global temperature.
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What Hancock doesn’t tell you is that while wind power is “cheapest in history” it and other renewable energies are heavily subsidized by the federal government to the tune of $4.9 billion. See the chart below. While wind may be an attractive 11.5 cents per kilowatt hour, the federal government has already given your money to the wind barons so they can offset the fact that their product is more expensive to generate and transmit than fossil fuel generated electricity, along with being extremely unreliable.
The $3.27 trillion stimulus and state grants, guess who pays for them? You do. Actually with the stimulus your grandchildren are going to pay for you to weatherize of your house and install that solar array.
Don’t forget that the “EmPower Maryland” bill allows utilities to charge you for their conservation programs. Furthermore, through the “EmPower” law the PSC allowed state utilities to implement decoupling. As Streiff explained it two years ago decoupling allows utilities:
to bill the customer for the cost of electricity (or gas) and for the cost of maintaining the distribution system. The utility is still guaranteed a return on its investment regardless of the amount of electricity used which means that we, as consumers, will pay more per kilowatt-hour (kWh) used if everyone conserves energy.
He also notes an EPA document on decoupling, which is worth repeating here.
Decoupling profit and sales volume is an option for overcoming utilities’ built-in incentive to increase shareholder profits by selling a greater volume of electricity (a.k.a. “throughput incentive”) and disincentive to implement energy efficiency and demand management programs that reduce sales. Typically, when profits are decoupled from sales, the utility is entitled to revenues needed to cover its fixed costs, including profits. If sales exceed projected levels, the revenue in excess of the allowed revenue is returned to customers by adjustments to the next year’s rates. Similarly, if sales are below anticipated levels, the customers make up for lost revenues in the next year’s rates. The cost of fuel and purchased power are generally treated separately and are passed on to customers though needed increases or decreases in prices.
Meaning that not matter how much you weatherize your home or conserve energy you are still subject to rate increases and higher monthly bills. Case in point, Amina Gauhar, who told the Sun that, “she has new appliances, replaced her windows and doors and installed energy-efficient lights. Still, her bills more than doubled, to $240 in January and $222 in February.”
Keep in mind Constellation has pending request for a rate increase this summer too.
So, when you allow BGE to control your thermostat this summer, you could end up paying more to use less energy.