Report: Carbon emissions reductions cost ratepayers $108 billion By EPN Staff A new report by the Common Sense Institute (CSI), a nonpartisan think tank, found Colorado’s carbon emission reduction goals will cost ratepayers $108 billion through 2050. The price of electricity will grow at more than three times the rate of inflation, meaning by 2030, households will spend $390 to $504 more each year on electricity. The report, Future of Electricity Costs in Colorado,combines Colorado Energy Office cost projections for attaining zero carbon emissions and the state Public Utilities Commission’s (PUC) 30-Year Rate Model, a long term rate forecasting tool. Why it matters About a third of Colorado’s electricity production is currently supplied by renewable resources, primarily wind power. The state will need to double its electric power generation capacity per capita over the next 15 years to reach the goal of zero or near-zero carbon emissions, according to the report. The larger capacity is needed to replace retired coal and natural gas plants with sources that produce less power per unit than fossil fuel technology. More energy storage is needed to account for the intermittent nature of solar and wind. The cost of these investments in wind and solar power and storage will be reflected in customers’ energy bills. By 2030, CSI predicts that energy bills for the average household will be $390 to $504 more each year, a cost that surpasses historic trends and inflation. Through 2040, households will spend an additional $6,400 to $9,280. Commercial business consumers will spend an additional $41,700 to $60,200 more. Industrial consumers will spend $770,000 to $1.1 million more than they otherwise would have. Using dynamic economic modeling, researchers found higher electricity prices will result in 25,000 fewer jobs, a GDP slowdown of $2.6 billion, and a decrease of $1,380 in disposable income for a family of four. The bigger picture The Colorado Energy Office commissioned the Pathways to Deep Decarbonization in Colorado’s Electric Sector By 2040 study to evaluate the possibility of attaining zero carbon emissions for electric power within 15 years. The state intends to triple the state’s electric generation and storage capacity from 21,816 megawatts to 67,256 megawatts. (A megawatt is a unit of power equal to one million watts. A megawatt can power a home for more than a month.) In order to meet these goals while retiring the state’s natural gas and coal plants the state will need to add 55,068 megawatts of new generation capacity from wind and solar and energy storage capacity, the study found. The Pathways Report provided six additional scenarios for reaching a 100% carbon emission reduction, which would levy additional costs of 20% to 42% above the primary scenario estimates. Among the scenarios: Adding geothermal power production, Building two small modular nuclear reactors, Limiting hydrogen use, and Using only wind, solar, and battery storage to generate power. Although the Pathways Report estimated state expenses, it did not translate these state-level costs to consumer costs. By combining Pathways Report findings with the PUC 30-Year Rate Model, Common Sense Institute researchers were able to predict the impact on power bills. More detail The report examined multiple scenarios: the baseline rate of increase from the PUC report, the rates from the PUC report and Pathways Report combined, the inflation trend rate (costs increase 2.5% each year), and the historic trend rate based on data from 2010 to 2020 (cost increase of 4% each year). The study concluded that if the historic trend held by 2040, consumers would pay $0.13/kWh (dollar/kilowatt hour) for electricity. When incorporating inflation into equation, consumers would pay $0.18/ kWh. The PUC baseline and Pathways Report trend shows consumers will pay $0.25/ kWh. The price of natural gas is likely to become more volatile after 2040 when it becomes the power generator of last resort. By that time, the power grid will rely on wind and solar power. In extremely hot or cold weather there is more demand for electricity to power additional heat or air conditioning. Wind, the report notes, is less likely to blow when the weather is very cold or very hot. Solar panels do not work well in cloudy or snowy weather. Spiking demand during hot or cold spells combined with lower wind and solar output means natural gas will have to fill the gap. Plants will have to buy natural gas on short notice which could increase costs. Power shortages pose another risk.
