This past harsh winter did more damage than just shutting down businesses and freezing roads. A recent government report found that consumers’ power bills were increased by $14 billion over last winter, as households turned up the heat to ride out the storms.
The Energy Information Administration found that long bouts of unexpected cold weather east of the Rocky Mountains led consumers to spend billions more this winter heating their homes, spending 27 percent more on heating oil and propane to warm their homes.
EIA said consumers spent $6 billion more on heating oil and propane this winter, 27 percent more than last year’s winter. Electricity expenditures rose significantly, rising $7.9 billion, or 10 percent more than last winter. Households also spent $5.8 billion more on natural gas this winter — up 16 percent from last winter.
On top of this, consumers were holed up inside of their houses more often as snow storms and freezing roads forced many businesses to regularly shut down. This meant that people spent less on fuel expenses, $5.8 billion, or three percent less than last winter.
In total, consumers spent nearly $160 billion heating their homes and keeping the lights on in the third quarter of 2013 and another $180 billion on heating and power in the first quarter of 2014, according to EIA.
The huge increases in power costs last winter has led some utilities to warn about the dangers of Environmental Protection Agency regulations that are forcing coal-fired power plants to prematurely shut down.
In particular, the agency’s Mercury and Air Toxic Standards (MATS) have already forced hundreds of coal plants around the country to be slated for retirement. Most of these retirements will happen before 2016, when MATS takes full effect.
Coal power being taken offline will mostly be replaced with natural gas-fired power and some green energy generation. But increasing reliance on natural gas for electricity generation (as well as other energy needs) could make natural gas prices more volatile, thus causing power prices to spike.
“We’re facing a set of questions that are new to the industry,” Clair Moeller, overseer of transmission and technology for the Midcontinent Independent System Operator, told the Associated Press.
EIA predicts that enough coal-fired power is currently slated for retirement to power 33 million homes. This means power prices could be permanently raised as coal-fired power is shut down. Without enough pipeline capacity to deliver natural gas to areas that needed it most, prices jumped. This was exacerbated by the fact that many power plants were forced to shut down in the freezing weather. Some areas of the country last winter saw power prices increase 1,000 percent.
“We haven’t operated at those low levels (of generation) for at least 30 years,” says MISO’s Clair Moeller. “It’s a warning of what may be to come.”
But coal was able to keep the lights on in many areas of the country as utilities brought coal plants online that were slated for retirement. One utility, American Electric Power was forced to run 89 percent of the coal plants it plans to shut down in the coming years.
This has forced state and federal grid regulators to question the EPA on grid reliability.
Republican Federal Energy Regulatory Commission commissioner Philip Moeller told Congress last year that MISO expected a shortfall in its power reserves in 2016, when most coal plants will be shut down.
“Think about rolling blackouts the summer before a presidential election, it kind of shifts the national discussion,” said Moeller.
“This year’s historically cold winter has served as a crystal ball into our future, revealing the energy cost and electric reliability threats posed by the Obama administration’s overreliance on a more narrow fuel source portfolio that excludes the use of coal,” said Laura Sheehan, spokeswoman for the American Coalition for Clean Coal Electricity.
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