It’s really silly to look at power costs without talking about underlying fuel costs. Why are New England power prices so expensive? Because the region refuses to build natural gas infrastructure.
Regarding refusal to build NG infrastructure: it is true that there is a paucity of NG infrastructure in northern New England, but is that because they refuse to build the infrastructure or because they are prevented from building it? VT may be a special case as our one-party legislature is maniacally anti-fossil fuel use. I was under the impression that NY state had outlawed the passage of any NG pipelines through their state to pass into any New England state. Of course the region does import vastly more expensive liquified NG into Boston but that is another story. Perhaps others know if NY is part of our region’s inability to have lower-cost pipeline NG here.
I don't have an opinion on this specifically, nor the detailed experience to comment (I am not American). I will say that I have wondered about deregulation generally. Ontario, where I live, has a kind of blended model, Alberta is pretty much a deregulated model, and many provinces retain the provincial utility, vertically integrated, Crown Corporation model. Power rates vary widely in Canada by province, but this has more to do with local resource types than the bower business model. IN the 1980s and 1990s it was a fad to dereg and have more 'competitive markets' in power to supposedly reduce costs, but personally for such complex systems that are often natural monopolies, I was never convinced.
ISO, 101 for dummies like me - is our ERCOT grid, but they - from your RTO description "tend to encourage redundant overbuilding of renewables-plus-backup." - That seems to be what we are stuck with and we are not federally regulated, like an RTO, - state regulations only?
So if we connected to other grids through transmission, as being promoted by some of our representatives in the state and in Washington, would we then have to submit to federal regulations? Or is this not the case?
Not quite the conversation here - but on my list of 101 questions about the grid and ERCOT.
I believe ERCOT would be subject to FERC rules if it were connected to other grids through transmission. I don't know if this actually would be a big deal, since ERCOT is already subject to NERC reliability rules. You would need to ask a utility lawyer about which FERC rules you would have to be concerned about if you were connected to other grids.
ERCOT, like most RTOs, has "economic dispatch" which favors wind and solar whenever they can get on the grid. Then, the redundancy required to back up the renewables makes the grid more expensive.
Great questions, Meredith. In response to the original post, I gathered information from several sources and via some discussions with experts. My sense is that two of the first states to deregulate (New York and California) have seen further cost escalations as those states pursued inherently expensive and unreliable solar and wind generation instead of nuclear power. OTOH, several southeast states retained the state regulatory model and pursued greater amounts of nuclear power. Those states have lower electricity prices - and reliable power. Advocates for expensive unreliable power have aggressively employed public relations tool;s to maintain the preference for expensive solar and wind.
Green Oceans had Robert Bryce as a speaker in an hour and twenty minute YouTube video released on July 10, 2024. https://www.youtube.com/watch?v=Z3aSTInWX9Y I highly recommend watching this informative video. This presentation clarifies the issues. (Spoiler alert) Robert Bryce favors reliable nuclear power and natural gas instead of unreliable solar and wind.
I live in SE NC. Duke increased my rate by 20 % last year, which has me scratching my head given natural gas prices are at historic lows. @ $0.15/kWh I feel like I’m must be in RTO heaven. When I queried Duke the excuse was expenses for hardening the grid.
The problem with the costs of the grid is that two kinds of costs get lumped together. First, replacing worn-out equipment. There's a lot of old equipment on the grid. That's one cost. The second cost is adding new transmission, especially for wind turbines that are located far from population centers.
I am sure Duke is facing these expenses. But which type of cost dominates?
Duke doesn’t have any wind that I know of and in general want to replace coal with ccgt. They don’t favor renewables. I am bombared with local adds from NGOs complaining about Duke building dirty gas plants vs renewables. Eastern NC has a lot of legacy solar.
Though there would be confounding factors, why not break down costs before and after states deregulate their utilities and/or have joined RTOs in the last x years? In Maryland, the minute Baltimore Gas and Electric's lobbyists sold the Democrat State House on the utopia of utility deregulation and sold off that generation, the newly formed company, Constellation Energy which purchased the plants requested a 75% increase in rates. Nothing changed. The plants all continued as before but because we were now competing for energy with other states in auctions, consumers were wrecked.
I don't think the auctions were the problem in this case. I suspect Constellation is trying to recapture the money it spent to buy the power plants. Unfortunately, I don't know enough about this situation to give a better answer.....
I agree in part; and for profit companies must make money. But our rates were quite steady over time as regulated utility rates typically are under the traditional customer/owner model, paying for ongoing maintenance and management. But BG&E splitting off a for profit company and buying the generation gave customers a modest reduction in their bills over the course of a year against a demand shortly thereafter to drastically increase rates over 5 years. State lawmakers pretended that they were shocked, shocked at the impertinence. Ditching the traditional model wasn't a function of providing better service or rates for customers but the opposite. Because a cabal of BG&E executives (I know one of them) see dollar signs and convince idiot lawmakers to sell out means that we are now effectively part of an auction system competing for power with states which DO NOT have plants supplying electricity to their residents. Marylanders (and other deregulated state utility customers) were sold down the river in order for newly formed for profit holding companies to skim profits from production. It is not hard to understand the explosion in the number and scale of generation companies in the 2000s and 2010s.
It’s really silly to look at power costs without talking about underlying fuel costs. Why are New England power prices so expensive? Because the region refuses to build natural gas infrastructure.
Regarding refusal to build NG infrastructure: it is true that there is a paucity of NG infrastructure in northern New England, but is that because they refuse to build the infrastructure or because they are prevented from building it? VT may be a special case as our one-party legislature is maniacally anti-fossil fuel use. I was under the impression that NY state had outlawed the passage of any NG pipelines through their state to pass into any New England state. Of course the region does import vastly more expensive liquified NG into Boston but that is another story. Perhaps others know if NY is part of our region’s inability to have lower-cost pipeline NG here.
I believe New York’s rules are part of the problem.
I believe you are correct that NY blocked pipelines from being built to New England.
Deep Blue policies strike again!
I don't have an opinion on this specifically, nor the detailed experience to comment (I am not American). I will say that I have wondered about deregulation generally. Ontario, where I live, has a kind of blended model, Alberta is pretty much a deregulated model, and many provinces retain the provincial utility, vertically integrated, Crown Corporation model. Power rates vary widely in Canada by province, but this has more to do with local resource types than the bower business model. IN the 1980s and 1990s it was a fad to dereg and have more 'competitive markets' in power to supposedly reduce costs, but personally for such complex systems that are often natural monopolies, I was never convinced.
In this podcast from NPR Planet Money slams solar, you know that some aspects of solar are a big scam. https://podcasts.apple.com/us/podcast/planet-money/id290783428?i=1000662071057
ISO, 101 for dummies like me - is our ERCOT grid, but they - from your RTO description "tend to encourage redundant overbuilding of renewables-plus-backup." - That seems to be what we are stuck with and we are not federally regulated, like an RTO, - state regulations only?
So if we connected to other grids through transmission, as being promoted by some of our representatives in the state and in Washington, would we then have to submit to federal regulations? Or is this not the case?
Not quite the conversation here - but on my list of 101 questions about the grid and ERCOT.
I believe ERCOT would be subject to FERC rules if it were connected to other grids through transmission. I don't know if this actually would be a big deal, since ERCOT is already subject to NERC reliability rules. You would need to ask a utility lawyer about which FERC rules you would have to be concerned about if you were connected to other grids.
ERCOT, like most RTOs, has "economic dispatch" which favors wind and solar whenever they can get on the grid. Then, the redundancy required to back up the renewables makes the grid more expensive.
Great questions, Meredith. In response to the original post, I gathered information from several sources and via some discussions with experts. My sense is that two of the first states to deregulate (New York and California) have seen further cost escalations as those states pursued inherently expensive and unreliable solar and wind generation instead of nuclear power. OTOH, several southeast states retained the state regulatory model and pursued greater amounts of nuclear power. Those states have lower electricity prices - and reliable power. Advocates for expensive unreliable power have aggressively employed public relations tool;s to maintain the preference for expensive solar and wind.
Green Oceans had Robert Bryce as a speaker in an hour and twenty minute YouTube video released on July 10, 2024. https://www.youtube.com/watch?v=Z3aSTInWX9Y I highly recommend watching this informative video. This presentation clarifies the issues. (Spoiler alert) Robert Bryce favors reliable nuclear power and natural gas instead of unreliable solar and wind.
I live in SE NC. Duke increased my rate by 20 % last year, which has me scratching my head given natural gas prices are at historic lows. @ $0.15/kWh I feel like I’m must be in RTO heaven. When I queried Duke the excuse was expenses for hardening the grid.
The problem with the costs of the grid is that two kinds of costs get lumped together. First, replacing worn-out equipment. There's a lot of old equipment on the grid. That's one cost. The second cost is adding new transmission, especially for wind turbines that are located far from population centers.
I am sure Duke is facing these expenses. But which type of cost dominates?
Duke doesn’t have any wind that I know of and in general want to replace coal with ccgt. They don’t favor renewables. I am bombared with local adds from NGOs complaining about Duke building dirty gas plants vs renewables. Eastern NC has a lot of legacy solar.
Couple links based on my earlier ISO vs RTO comment
https://247mesa.com/unveiling-iso-and-rto-deregulated-markets/#:~:text=ISOs%20generally%20operate%20within%20a,operations%20in%20a%20localized%20area.&text=RTOs%20encompass%20larger%20multi%2Dstate%20or%20multi%2Dprovince%20areas.
https://en.m.wikipedia.org/wiki/Regional_transmission_organization_(North_America)#:~:text=Similar%20to%20an%20RTO%2C%20the,petitioned%20FERC%20for%20the%20status.
Though there would be confounding factors, why not break down costs before and after states deregulate their utilities and/or have joined RTOs in the last x years? In Maryland, the minute Baltimore Gas and Electric's lobbyists sold the Democrat State House on the utopia of utility deregulation and sold off that generation, the newly formed company, Constellation Energy which purchased the plants requested a 75% increase in rates. Nothing changed. The plants all continued as before but because we were now competing for energy with other states in auctions, consumers were wrecked.
I don't think the auctions were the problem in this case. I suspect Constellation is trying to recapture the money it spent to buy the power plants. Unfortunately, I don't know enough about this situation to give a better answer.....
I agree in part; and for profit companies must make money. But our rates were quite steady over time as regulated utility rates typically are under the traditional customer/owner model, paying for ongoing maintenance and management. But BG&E splitting off a for profit company and buying the generation gave customers a modest reduction in their bills over the course of a year against a demand shortly thereafter to drastically increase rates over 5 years. State lawmakers pretended that they were shocked, shocked at the impertinence. Ditching the traditional model wasn't a function of providing better service or rates for customers but the opposite. Because a cabal of BG&E executives (I know one of them) see dollar signs and convince idiot lawmakers to sell out means that we are now effectively part of an auction system competing for power with states which DO NOT have plants supplying electricity to their residents. Marylanders (and other deregulated state utility customers) were sold down the river in order for newly formed for profit holding companies to skim profits from production. It is not hard to understand the explosion in the number and scale of generation companies in the 2000s and 2010s.
Sounds like Deep Blue policies are the real culprit here!