I have been accused by my wife of being a pack rat. I resolutely hold on to old clothes that I am hoping will come back into style; tools that will never work again; Christmas decorations that haven’t adorned a tree, wreath or door in eons; and lawn and garden equipment that won’t work, year after year.
I’m not cheap, just conservative. It pains me to replace what is given away, because it will surely cost me significantly more today than it did yesterday. These same miserly feelings appear when I consider how we will add to or replace our existing generation facilities.
With the high level of attention devoted to natural gas price volatility, climate legislation and the simple economic rule of supply and demand, in the last few years we’ve been spectators to electricity price fluctuations that have moved higher and higher.
While many of us, especially in states dependent on natural gas, have enjoyed a brief respite from record-setting price increases, we will see the day when prices again go up and never come back down - and that day is probably closer than many of us accept.
What concerns me is that while economists recognize that the future of energy in our country is critical for future economic growth and affordability, no serious contingency planning for an energy sector collapse has been made.
Such an occurrence is lying in wait, and could have enormous cost implications-what I refer to as “portfolio shock.”
Indeed, we may well rue the day we became the masters of central station electric power, because we quickly learned to let demand dictate generation needs. The costs for building new generation were palatable, and building it was easy.
Today’s energy picture, however, is wrought with complexities. The cost of building new generation has surged. We were prevented during the last decade from building new generation that would have been a major shot in the arm for economic recovery today. And each new day brings the need for even more electricity.
During the last 10 years, we’ve seen construction costs for highly efficient natural gas generating plants go from roughly $800 per kilowatt to as much as $1,200 per kW. Those costs will be reflected in what we pay for electricity. This situation is going to lead to portfolio shock.
The same economic principle holds true whether new generation is coal-based or nuclear. Those construction costs have escalated at the same pace and new coal-based generation-if it can be built-will surge even more with potential climate legislation mandates. Add the high costs of alternative generation such as wind and solar, as well as the challenges and costs of transmission, and our nation, which demands more electricity every day, will encounter greater shock.
Never has there been a more appropriate time for the consuming public to partner with the electric utility sector to conserve and practice efficiency. Our charge now is greater than merely saving the day. We should provide a vision and a map for future generations to follow. We need to wake up to the realities now before our members and the rest of the consuming public are “shocked” into reality.
If we don’t lay everything on the table now and put our visions into actions, the consequences could make today’s challenges seem trivial.
Ray Beavers is general manager/CEO of United Cooperative Services in Cleburne.