Don Brunell: The electric chickens have come home to roost

For years, energy experts warned us that regulations and policies that reduce the supply of affordable conventional energy would result in higher prices for American families.

Now it is clear the warnings were well-founded. The USA Today recently reported that electricity bills have skyrocketed.

The newspaper reports that American families paid, on average, a record $1,419 a year for electricity in 2010. Demand for electricity remains high even as energy supplies shrink. In addition, prices are rising due to the cost of meeting excessive EPA regulations that target conventional energy sources such as coal and oil.

The effect is being felt throughout the U.S.

In what’s labeled as an “environmental cost recovery,” Louisville Gas & Electric in Kentucky announced ratepayers will see their electric bills increase another 19.2 percent by 2016. In explaining the reason, LG&E spokesman Chip Keeling said, “The EPA is forcing utilities to do this. We don’t have a choice. It’s not a question of are we going to meet them. The question is when and how and how much money. “

Those electricity rates are expected to go much higher as companies pay billions to replace older power plants and shut down existing coal-fired power plants that are too costly to retrofit.

Currently, half of the electricity used in the U.S. is generated from coal-fired power plants. But 10 percent of the nation’s coal energy is expected to go offline in the next four years, according to the Institute for Energy Research.

For example, the IER projects that three coal-fired plants in Michigan would be shut down because of EPA regulations by 2016, leading to brownouts and service interruptions.

Ironically, many of the same activists who oppose coal because of its emissions also oppose clean-coal technology projects to develop near-zero emission coal plants.

Progress on clean-coal technology in the U.S. has been painfully slow.

For example, the Future Gen project in Illinois was announced by President George W. Bush in 2003 as a public-private partnership to build the world’s first near zero-emissions coal-fueled power plant. The 275-megawatt plant was intended to demonstrate the feasibility of producing electricity and hydrogen from coal while capturing and permanently storing carbon dioxide underground.

Today, almost nine years later, nothing has been built. In fact, the plant design has yet to be approved. The project has been stalled by political and bureaucratic delays, as well as Department of Energy changes in financing and design that prompted some private funders to back out of the project.

In contrast, China - which leads the world in clean-coal technology - plans, cites, designs and builds its new clean-coal plants in less than two years.

Why should we in Washington care? After all, our electricity rates are among the lowest in the nation, thanks to our abundant supply of hydropower.

Unfortunately, that advantage is about to disappear.

Initiative 937, approved by voters in 2006, requires large utilities to get increasingly larger portions of their electricity from costlier renewable sources, beginning next year. The writers of I-937 explicitly excluded hydropower from the list of allowable renewable energy sources.

That means that, beginning in 2012, Washington’s utilities will have to sell our cheaper hydropower to California and purchase higher-priced alternatives in order to meet their quota. The result: ever-increasing electricity rates. Opponents estimated I-937 would ultimately increase electricity rates in our state by as much as $370 million per year.

Our nation’s economic strength was fueled by an abundant supply of affordable energy. If we are to regain that strength, elected officials must actively pursue rational energy policies that embrace clean-coal technology and recognize that American families pay the price - literally - for bad energy policy.

The troubling future the experts warned us about is no longer simple conjecture. It is here.

(Don Brunell is the president of the Association of Washington Business.)