Arg. That’s “…charging a somewhat higher price for electricity over the medium and [i/]long* run.”
Actually, when I lived in Ithaca back around 1990, the local electric company had just such a variable rate plan as an option, i.e., instead of paying, say 8 cents per kilowatt-hour all the time, you could sign up for a plan where you paid 4 cents at night and 12 during the day. That was the plan we were on because our apartment had been built with a water heater with good storage on a timer so that it heated the water at night. (I guess our electric meter was also on a timer…or there were two meters and the timer switched things over from one to the other, or something like that.)
As to the main subject of tonight’s symposium, well, I am glad Sam that you have all of us leftist environmentalists figured out! Actually, I imagine that the reasons for these people proposing price caps are many and varied…so perhaps the same sources where you learned of their positions (and which you haven’t given to us, I might add) might give their justifications?
As for me, when Senator Schumer here in New York (who is fairly liberal but with a bit of a populist streak that can be kind of annoying) was pushing Clinton to open up the oil reserve last year, he received an e-mail from me telling him in no uncertain terms what folly I thought this was. In general, I am ecstatic to see energy prices moving up toward levels that more realistically reflect their real costs. (And, in fact, the cost that I personally pay for gasoline is approaching $3.50 per gallon…but I digress.)
Having said that, there are a few things to think about: One is that a rather slow, gradual rise in energy costs would be better than some of the wild swings that are occurring now. Even I never thought it would be wise for the economy to slap a few dollars of tax onto gasoline immediately…It should be phased in predictably over time so people can adjust and plan accordingly. Second is that I think it is reasonable to be concerned that some people may be using some real shortages in energy (along with a hair-brained deregulation scheme, in the case of California) to “game” the system and make a monetary killing and that this should not be tolerated. Third is that high energy prices, as pointed out above, will impact disproportionately on those least able to afford them. Personally, my solution to this last issue would be to give some sort of tax break to the poor, i.e., give money back to them in other ways…since I think that artificially low energy costs create more evils than they solve in terms of their being less regressive.
Finally (although I hate to admit this!), there are probably some other issues that I haven’t even thought of, which is why I am honestly curious to see your sources for the position of, say, the Sierra Club on this issue. But, like I said, this is one environmentalist who has said, only half-jokingly, that gas prices haven’t gone up high enough until the Ford Excursion owners are crying at the gasoline pumps each time that they fill up! 
By the way, as an aside, the Sierra Club has taken a few positions that might surprise people. As my current issue of Sierra points out, not only is it false that the California energy crisis is in part the fault of environmentalists who opposed new plant construction (as some have claimed), but in fact the Sierra Club had been in favor of new power plant construction there. The reason is that the new plants, even when using traditional fuels like natural gas, have technology that makes them way, way cleaner than the old ones. It was in fact the private utilities themselves who were fighting the recommendation by the California Energy Commission to build new plants.
Here’s a quote (Sierra, May/June 2001, p. 60):
I would also strongly agree with almost everything said in flowbark and pantom’s simul-posts in this thread.
In particular, I would agree that Daschle is probably being more politically opportunistic here more than anything else.
I noticed the same disappointing political opportunism displayed by Daschle, or one of the other Democratic leaders like Gephardt, to score points with an attack on Bush for being insufficiently supportive to Taiwan by not selling the Aegis system to them. Urgh!!! With friends like this…
First of all, remember I DID say that I was painting with a broad brush - I’m quite aware of the diversity of opinion in the rank-and-file environmental movement. I’m mainly talking about the spokemen here - the ones who would most directly benefit from gains in government power.
Sorry, I don’t have sources for you - my source was a news story on TV that showed sound bites from various people criticising the administration over the power crisis, and those were the ones that caught my eye.
jshore: Well, there’s a cute little ‘gotcha’ in that quote - the Sierra Club approved the building of new power plants provided that 1/4 of them be geothermal or wind. Who was supposed to pick up the cost of those? Because they would have definitely been money-losing propositions.
I wouldn’t pretend to know just what the ‘right’ type of price hike is. I trust the marketplace. That’s the difference between me and the statist central planners - they think they DO know what the ‘right’ prices are, and that they know better than the people who are actually buying things.
Along the same lines, I’m not sure if the average household should pay the spot price for electricity, but I think the market itself would do a pretty good job of setting the prices where they ‘should’ be, and when. I have heard that there would be MONUMENTAL savings from charging different rates during the day, because peak power is much, much more expensive to deliver than lower duty-cycle power. When demand gets really high, electricity can cost as much as 10 times as much to produce as when it’s low. Right now, we hide that price difference from consumers. SO the ones using the cheap, off-peak power are subsidizing the ones who really stress the system.
If I knew that power between 5 and 6 PM was much more expensive than the power between 6 and 7, my family would be cooking later suppers, y’know?
Don’t know about geothermal, but wind has become very competitive of late. They’re such “money-losing propositions” that even Texas, of all places, has begun to install them. Yes, sometimes it costs more in the short run to install renewable generation. But when you consider all the hidden costs of fossil fuels in terms of health and climate, renewables may actually be cheaper.
Give me a break. This move to deregulate electricity has been a complete failure, and no amount of scapegoating of environmentalists or other groups can cover that up. All one has to do is look around the country, or the world for that matter. Other countries with strong environmental movements and “statist” electricity systems have managed to increase generation from renewable sources without the embarrassment of rolling blackouts. Yet in the one place where rabid conservatives have actually bought enough influence to “deregulate” a natural monopoly – Viola! The third world comes to the high tech center of the world!
Yes, power-generation has been one of the few things that Gov’t has done right (thank you, DWP!).
However, some environmentalist groups seem to love making themselvs a nuisance by protesting ANYTHING that could potentially harm a single tree… the only long-term solution is, of course, more power plants.
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I’ve been a Siera Cllub member for 35 years or more. I agree with them on a lot of isses. I enjoy hiking with them
But, gee whiz, their quote posted by jshore is spin or damage control. Of couirse, the Sierra Club has hampered the development of new power. In particular, IIRC they have actively and successfully opposed the envionmentally best alternative – nuclear.
There’s lot of research and hopes for superior power sources – non-polluting and renewable. But, windmills and solar power produce relatively little energy. The cleanest major power sources are natural gas an nuclear. Natural gas is limited, because we have only so much of it. Nuclear is the least poluting, and it doesn’t even add CO2 to the atmosphere.
Furthermore, gas and oil products are valuable for making chemicals, plastics and other materials. It’s an incredible waste to just burn them up.
And keep in mind that the majority of the dangerous waste is 100% controllable (or near enough, compared with the huge gushes of air pollutants put out by other power generation processes).
[QUOTE]
*Originally posted by flowbark *
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Don’t cry for me. As I have posted before - around 75% or more of my time that I spend with the Evil, Satanic Coal Power Plants is working to make them more environmentally friendly, and reduce their emissions. And one way to reduce their CO[sub]2[/sub] emissions is via biomass combustion - cofiring biomass and coal, and thus reducing the absolute amount of CO[sub]2[/sub] put into the environment (so long as the biomass is from a renewable source). I would have a lot of work to do, and be quite happy working with biomass plants.
You know how much a $10 per ton of CO[sub]2[/sub] tax would actually add to your electric rates? Well, I’m going to do something I am loathe to do, only because I e-mailed the client and got their permission - I’m going to post economic numbers.
I looked at 5 coal power plants in Illinois - from the far South to near Chicago. At full load, these plants generate about 0.92 to 1.12 tons of CO[sub]2[/sub] per MW-hr generated. Thus, a $10 per ton tax on CO[sub]2[/sub] results in a 9.20 to 11.20 tax per MW-hr - or about 0.92 to 1.12 cents per kW-hr. Or, depending on your area, about a 10-20% increase in electric rates (this is easy to fingure, since the tax would be a pass-through to the customer).
Now this assumes that only coal generation is available. Since power in Illinois comes from nuclear, gas, and a couple other small point sources, the actual increase has to be weighted by the coal contribution to the power cost. Thus (making a WAG here since I don’t have figures for Illinois exactly, but seem to recall coal is about 80% of Illinois power) we would be looking at a price increase of about 0.74 to 0.9 cents per kW-hr - maybe an 8 to 16% increase.
Not a lot, and I doubt that a tax of that level would change any coal consumption at all. Because at that tax level, coal is still cheaper than anything else except nuclear and hydro - and neither of those are going to be seeing any increases in capacity soon to make up for lost coal generation.
Now…people in the power inductry will scream and say that it is a huge cost - and it is, on some levels. The actual cost to generate electricity from coal - the total fuel-related cost - ranges from 1.2 to 2.2 cents per kW-hr. So if you look at it on that level, it is a huge percent increase in the cost of generation. But not huge increase on your final bill, which consists of the operations and maintenance of the utility, transmission and distribution lines repair and upkeep, construction, office staff, billings, meter readers, secret kickbacks to the Republican-Military-Industrial-Stock Market-Rich Fat Cat-Cabal bent on Slaughtering the Environment and Supressing Hemp - Nature’s Wonder Plant, etc…
Why, yes it is, isn’t it! 100% controllable! Just pour the toxic crap into barrells, mark it “Toxic Waste Lite”, and bury in the Hamptons! Or Vail, Colorado. Orange County, California. Any place where hard-headed, pragmatic Republicans stand ready to “do thier part”. Despite the hysterical ravings of tree-huggin wackos, the stuff will be perfectly safe in as little as 10,000 years. Well, actually, half of it will be safe in 10,000 years. A mere quibble.
Not the Sierra Club…It is was a state of California recommendation endorsed by the Sierra Club. And even if those did cost a bit more, given that the system was regulated back then, I am sure that the rates that were set would still have allowed those companies to make a profit. Sure, that might have meant slightly higher costs for consumers in monetary terms, but it would have meant lower costs to their lungs.
Well, that may be the distinction between you and “statist central planners”. But let me tell you the distinction between you and those of us who believe in a market with some amount of regulation: You trust the marketplace as a religious belief, even in the face of obvious problems…when the very economic theory on which markets are based tells one that a good will not be priced correctly (or that there are other problems). The rest of us try to understand both the virtues and limits of markets (to steal the subtitle of the book “Everything for Sale” by Robert Kuttner), and to formulate policies accordingly.
That being said, I will agree with you that allowing different peak and off-peak rates is probably a good idea…and, as I noted, such a plan was available in Ithaca back around 1990, although I am not sure many people took advantage of it.
That’s the thing about SUVs, they’re far and away more expensive than Hondas, and someone who can afford such an expensive vehicle SUV in the first place is far more likely to pay more for gas.
Living in San Diego, I have noticed that there aren’t very many Navigators in the “low income” sections of town.
There are plenty in Coronado, however, and Coronado is one of the most affluent places I’ve seen.
I don’t trust the market as a ‘religious belief’. I’m fully aware of market failures, and of the problem of externalities, especially when it comes to large-scale, widely used commodities like electrical power generation.
I’m also aware of the difficulty in letting the market work unfettered in areas where the use of commodities is shared amongst many people. For example, I’m in favor of auto users paying the *real cost of their use of vehicles, but that’s simply damned hard to determine. It’s not just car owners that benefit from roads, for example - it’s everyone who buys and sells goods that are transported on those roads. And it’s everyone who can be transported to a hospital quickly due to the existance of those roads. And so on. So I think the state has a role to play in many of these areas.
My point is that prices are best left to the market. Attempts to artificially set prices too high or too low just leads to shortages, gluts, inefficiency, poor allocation of production, etc.
If the market needs to be supplemented by government in some cases, it’s much, much better to do it in other ways. For instance, pollution credits which can be bought and sold on the market. The government decides how much pollution to allow, allocates credits to each company based on their current pollution levels minus the percentage the government wants reduced overall, and then lets them buy and sell them. In that way, companies that find it very expensive to clean up may find it better to simply buy pollution credits from companies that have an easier time of it. Society’s goals are met (a new, lower level of pollution set by the absolute number of credits available), while allowing the market to function as best as it can.
Again, setting a price cap between the monopoly price and competitive price will tend to increase efficiency (reduce deadweight loss, to be more specific). In the current context, the price cap shouldn’t be too hard to calculate, given that the spot price has been over 11 times the typical price paid for electricity in CA.
Um, wouldn’t a modern gas turbine plant still be cheaper?
Also, my reading of May 10th’s ExxonMobil ad in the New York Times, (not the greatest source admittedly) suggests that with a 1 cent price increase, coal would be worse than natural gas, similar to wind, and still cheaper than nuclear. About the only thing more expensive than nukes is solar and other exotics. I’m only quoting this middling source because it accords with my impressions. What’s the deal, A?
You know me, sorta. I drive a little bitty Toyota. As you know, I’m a tree hugger. And gas can go to $5 a gallon as far as I’m concerned. And SUV owners can go to hell. (yeah, yeah, some nice people made the stupid, selfish decision to own one of those perfectly ridiculous vehicles. And they’ll be going to hell for it. 
)
stoid
Cheaper than what? A plant burning $2.50 to $6.50 per MBtu gas is not ever going to be cheaper than a coal plant burning $0.80 to $1.30 per MBtu coal, unless you have an ENORMOUS increase in O&M costs (and if you decided to apply a CO[sub]2[/sub] tax, that would also impact gas plants too - although not as much as coal plants, since gas combustion produces less CO[sub]2[/sub] per MBtu burned than coal does…
And I would give you an answer on your second part, but I have no idea what the “1 cent” is referring to. A 1-cent price increase in what?
As for the ‘extremely high price of nuclear power’, there’s nothing intrinsic to nuclear that makes it expensive, and in fact in countries other than the U.S., the cost of nuclear is very competitive, even factoring in decommissioning costs and waste removal and disposal costs.
Currently, coal has a slight edge over nuclear, but possibly not if the external cost of the pollution emitted were factored into the equation.
Another big plus for nuclear - it’s not very sensitive to changes in the cost of fuel, because fuel costs make up a fairly small part of the overall cost of running a nuclear plant. So if fuel prices double, the price of coal-fired electricity might go up by 60 or 70%, but the price of nuclear power would only go up maybe 10% or so. From that standpoint, it’s a more reliable and stable source of energy production.
One of the reasons new nuclear plants have not been built in the U.S. (and have been built all over the world at the same time) is that the cost of coal and gas in the U.S. has been much lower, to the point where nuclear was more expensive. So yes, the environmentalists have kept new plant proposals mired in red tape, but the industry hasn’t exactly been fighting real hard for nuclear either.
In Europe, nuclear is quite a bit cheaper than coal or gas, and the more dense population makes pollution from the plants more important to control. Thus a greater reliance on nuclear.
But I repeat - there is nothing intrinsic to nuclear power that means it needs to be expensive. The cost of the fuel itself is very low - about 1/4 that of coal I believe, for the same kwh output. It’s the rest of the stuff (controls, safety systems, containment vessels, decommissioning, disposal of waste) that are expensive. And these costs may be brought down with advancing technology.
Canada, for example, as 14 operating nuclear reactors. The Province of Ontario gets 48% of its electrical power from nuclear. In Canada, nuclear power is currently 35% cheaper than fossil, over the entire life cycle of the plant.
Unfortunately, Canada is no longer building nuclear power plants either, due to extreme pressure from environmental groups. We’re still selling our CANDU reactors to other countries, but we’re not building our own Canadian-designed power plants here at home.
[Nukes hijack]Yes, it’s true that nukes have low operating costs. They also have appreciably higher construction costs. These costs become more burdensome when real interest rates are high.
Nuke Waste: There is a single long-term nuke waste facility under consideration, in Nevada I believe. The feds are still studying it; the state opposes it. Even pro-Nuke people have to admit that there’s something bent about approving additional nukes before the technical/political problems of nuke waste siting are solved.
Anyway, I’m not adamant against new nukes. I am adamant that the industry should be financially responsible for damages resulting from accidents as well as the disposal of their waste. That is, I oppose existing nuke power subsidies. [/Nukes hijack]
Anthracite: It was 1 cent per kilowatt hour. I guess you disagree with the chart presented by ExxonMobil (350K file available at http://www.exxonmobil.com/news/opeds/100501.pdf ). AFAIK, ExxonMobil is a lot more involved in natural gas than coal, so the chart may reflect that.
Anyway, I tried to find a short discussion (complete with table) of the relative costs of different power sources on the web and came up empty. If you know of any, perhaps you could point me in the right direction.
I had thought that in a conventional power plant, coal would be cheapest, but that a modern gas turbine plant (which uses natural gas but cannot use coal) was still cheaper. But from the numbers you gave, it appears that I was wrong. Hm. Maybe the ExxonMobil figures applied to the entire country: do the relative benefits of a coal-fired plant drop substantially as you get further away from the coal mine?