Rumination XIX– R.I.P. Coal; Long Live the Dictatorship (Secui Ultima)

Those who might be sensitive about some of the things that the RT writes please take note. The “unfriend” and “unfollow” links are always available and close at hand. Thank you in advance.)

It appears that the RT may have ruffled a few feathers with his last post. Ruffled feathers don’t concern the RT, and in this case, ruffled feathers are a good thing. With enough ruffled feathers, we may get folks to understand what the real ramifications of the EPA’s CO2 regulations, the “carbon pollution” charade, and the “War on Coal”.

You see, We The People didn’t ask for these regulations. A small, but vocal minority of liberal environmentalists rounded up legislative sponsors Markey and Waxman, from the East and Left Coasts, respectively, to push for carbon legislation (aka “Cap and Trade”) in the Congress. And guess what? IT FAILED. It failed because Mr./Ms. Average American didn’t believe there was a crisis, or didn’t care, or didn’t want Washington deeper into their wallet. But, whatever the reason, the legislation FAILED.

So our President decided, by fiat (aka Executive Order), that he would bypass Congress and force such regulation on America, regardless of what We The People wanted. Long live the Dictatorship!

Alright, at least we should all be clear on where the RT stands on this issue. Now, let’s describe the actual impact on your wallet.

Rather than bore you with discussions about generation planning, load duration curves, capacity factors, heat rates, and the like, let me offer an analogy.

Let’s say that is the RT’s responsibility to provide you with housing (Eek! That sounds a lot like a Federal Housing Authority, but I’ll have to go with it.).

Each month, you’ll pay rent (to cover the fixed cost of the housing complex, i.e. the mortgage), and utilities (i.e. the cost of living in the apartment).

Now the RT’s housing complex was built in the 1980s and isn’t the fanciest place to live, but the dwelling units are in good working order and meet or exceed all existing codes and regulations. There’s even fresh paint and new carpet when a tenant moves in!

Then, one day, the Department of Housing and Urban Development (HUD) issues new regulations that make it impossible for the RT to continue to lease out his housing units. They’ve decided that the construction techniques and materials used are no longer safe, though they’ve been in use for decades.

The RT warns all of his tenants that these regulations are going to cost them money, but no one has felt any pain yet, so they downplay their impact.

So, in order to meet the requirement that he provide you with a place to live, the RT begins construction of a new housing complex. The cost per square foot of this complex is MUCH higher than the one you currently live in, which was built in the 1980s – perhaps 2-3, or even four times the cost. And, because of the HUD regulations, the utilities in the new complex will be much higher than what you currently pay.

You watch the construction of the new complex progressing with interest, but have not felt any financial impact yet, so all is well.

Then comes the day that the new housing complex is complete. You feel a sense of excitement as you move into a new apartment, with all the modern conveniences. You brag to your friends that you have a new place to live, and that the old place will be shut down.

After the first month, you get your first rent statement, only to find that it is 2-3, or even four times the rent at the old place. Then comes the first round of utility bills, and they are twice as much as you are accustomed to paying.

Meanwhile, the RT is preparing pay someone to demolish the old housing complex. He can’t sell it to anyone to recoup his investment, since the HUD regulations forbid its continued use. He just has to eat the stranded cost. After all, the Federal Government knows best. Actually, he will be forced to pass the cost of the stranded investment and the demolition costs through to you in rent, if he wants to stay in business.

You scream; “NO! Don’t destroy the old place! I want to move back in! It was more affordable.” Yet, it’s too late. The regulations were written several years ago, and no one stood up to complain or to oppose them. The day of reckoning has come and it’s too late to do anything about it. You are stuck.

Now, what does this have to do with electric utilities? Allow the RT to explain.

In the electric utility space, the cost of the new housing complex is analogous to the cost of new generating plants to replace those that burn coal. The rent that you pay is a portion of the monthly mortgage payment on that investment. The utilities that you pay to live in your housing unit correspond to the cost of the fuel to run the power plant. The old plants burn a fuel that is less expensive than that proposed for the new plants.

And those HUD regulations that forced the RT to shut down his existing housing complex? Those are analogous to the recent EPA regulations on CO2 emissions.

As an electric utility consumer/ratepayer, you won’t feel a thing until all of the new plants have been constructed and the old plants have been abandoned. That’s because state utility commissions won’t allow any cost associated with a plant investment to be recouped from ratepayers until the facility goes into commercial production.

By the time you see or feel the first change in your electric bill, it will be too late to change anything. You’ll simply be stuck.

If electric utilities are forced to abandon the existing coal fleet and move it all to natural gas, it WILL cost you. And don’t think that solar or wind or other renewables will save you. The investment cost per unit of electricity provided is more like 10x the current level of investment. That means an even higher “rent”.

If you’ve read this far, I’ll simply say “thank you”. You’ve endured much.

The RT wishes that he was grossly exaggerating the situation, but he’s not. He’s am genuinely concerned for the future of your wallet … and his.

If you are as fired up about this as the RT is, contact your Senators and Representative and tell them to stop this mess. That’s our only hope.



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