Moore among NC counties getting gouged on electricity costs
Raleigh’s John Locke foundation has released a very interesting study illustrating: (1) how electricity costs are having an extraordinary impact on our current affordability crisis and (2) how pricing is having a disparate impact on different regions of the state:
After years of gearing electricity policy to political choices apart from affordability and reliability of service, policymakers in North Carolina are becoming concerned about rising power bills. Electricity is a basic household necessity, so rate increases are particularly harmful on low-income families, making their energy needs compete with other essential expenses, such as housing, food, and health care.
This report aims to develop a county-by-county energy poverty index for North Carolina, using a residual income approach that measures the difference between what households in poverty pay for energy and the commonly accepted affordability limit of 6.5 percent of household income. Household spending above that limit is considered energy poverty, and the extent of spending above the limit is the energy poverty gap.
This index produces two rankings of counties according to household energy poverty. One ranking is for households served by one of the state’s three investor-owned utilities (IOUs), and the other is for households served by a municipal utility or electricity membership corporation (EMC). It also assigns four levels of severity to ranges of energy poverty to help differentiate among the counties, with Level 1 being the most severe and Level 4 being the least severe.
The advantage of this approach is that it moves beyond identifying whether households are burdened and instead quantifies the magnitude of unmet need. By basing the analysis in the residual income framework, this report seeks to provide a more policy-relevant measure of energy poverty, one that better captures the financial reality facing low-income households and offers a clearer basis for evaluating the scale and targeting of potential policy interventions, to which the report then turns.
Affordability and reliability tend to be linked. Efficiency is the hallmark of reliable resources, and that same efficiency promotes their affordability, all things considered. Dispatchable, reliable baseload capacity is less expensive, requires far less land, and needs much less transmission infrastructure than intermittent, renewable capacity. It also has no need for backup generation and overbuilding, unlike the intermittent renewables. Finally, the most inexpensive sources of electricity generation are the preexisting power plants whose capital costs have already been met.
About two-thirds of household electricity sales in North Carolina are from the IOUs: Duke Energy Carolinas, Duke Energy Progress, and Dominion Energy. State policies that impact their generation mixes and ultimately rates will therefore have a significant effect on energy poverty across the state. Remaining household sales come from the state’s 76 municipal utilities and 32 EMCs. State policymakers should be careful not to craft policies that negatively impact their resource decisions and rates.The county rankings for their customers showed more counties with severe energy poverty gaps than did the county rankings for customers of the IOUs. [….]
The report comes with a pretty cool map that gives you a county-by-county look at how electricity costs impact residents. For instance, here’s what it found for Moore County:
Folks at Locke tell me the acceptable affordability threshold for household electrical costs is 6.5 percent of household income. On average, they explained, low-income folks in Moore County are spending 12.18 percent of household income on electricity. This is what they found for both investor-owned utility customers and EMC customers.
I remember hearing something about Duke Progress wanting a rate hike. It seems like this study needs to be part of that discussion.
Before we let you go, the authors of Locke’s study had some recommendations for dealing with this issue they call *energy poverty*:
[…] 1. Repeal the Carbon Plan Law
By far the cheapest sources of electricity are existing power plants, not new builds, but the Carbon Plan law requires retiring all of North Carolina’s baseload coal-fired power plants — one-fourth of the state’s current capacity.
2. Pass Baseload-for-Baseload Legislation
This legislation would require that no baseload power plant be closed until it has been replaced by equal or greater baseload capacity.
3. Require the NCUC to Compare the All-In Costs of New Power Plants
Proper, fair comparisons will lead to least-cost resource choices and keep bills lower.
4. Pass an Ensuring Reliable and Affordable Electricity (“Only Pay for What You Get”) Act
This legislation would base a utility’s recoverable costs of any new generating source placed into service upon its capacity value, which would better align utility incentives towards least-cost and reliable electricity provision by placing the risk of adding unreliable resources on utility shareholders rather than customers.
5. Repeal the Clean Energy and Energy Efficiency Portfolio Standards (CEPS)
The CEPS law mandates that utilities make some resource and other choices, such as purchasing renewable energy credits from outside clean or renewable energy projects for power generated that does not serve their own customers, in order to suit political choices without regard to affordability or reliability.
6. Pass Consumer-Regulated Electricity (CRE) Legislation
This legislation would let data centers supply or buy their own power independent from the grid and therefore avoid saddling households with higher rates.
