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How Coal Affects Rate Payers

Coal plants will not just affect our health and wellbeing – they will also have an effect on our pocketbooks.

Utilities try to market new coal plants by telling consumers that coal is the cheapest way to produce electricity. However, their cost analyses do not include the future cost of carbon due to regulation – an oversight as dramatic as cost analyses that assume fuel will be free.

Within the next decade, we will almost certainly see federal regulation of carbon dioxide emissions from electricity. While it is impossible to guess what the exact cost of carbon will be, a June 2007 decision from the New Mexico Public Regulation Commission states that a likely base case will be $20 per metric ton of carbon dioxide, increasing at an annual rate of 2.5%. For an electricity source that is as carbon intensive as coal, these extra costs are significant. For a typical 500 MW coal plant, the annual additional cost would begin at $83 million, and increase from there.

But these extra costs will not be shouldered by the utility. We know from experience that utilities almost always try to pass on extra costs to their customers, and this would not be an exception. In both the California and Montana deregulation fiascos, when electricity prices skyrocketed, consumers were forced to pay for the mistakes of their utility companies.

The utilities have enough information to make educated decisions about their future energy investments, and educated decisions do not involve investment in coal. It is time to let utilities know that consumers are not willing to pay for their bad investments in coal.

Citizens are already taking action to tell their utilities that they will not tolerate high prices because of bad investments in coal. Ratepayers United of Colorado states that “it is in the long term financial interest of ratepayers to stop building coal plants and to develop renewable electric generation resources and efficiency measures to meet our demands for electricity.” Contact Gina Hardin for more information about the action you can take as a ratepayer.

To see more information about estimates of the future cost of carbon emissions, see a report by Synapse Energy Economics, Climate Change and Power: Carbon Dioxide Emissions Costs and Electricity Resource Planning .

It is possible and profitable to address growing energy needs in the West through renewable energy sources and energy efficiency measures.

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