Get used to paying more for natural gas and electricity

Via the Kokomo Tribune:

U.S. consumers should be deeply concerned about where energy prices are heading. The worst of the global energy crisis — which drove up the cost of everything from oil and natural gas to electricity — may be over. But new storm clouds are on the horizon.

What’s happening with natural gas and electricity is particularly alarming. Due to the increasing needs of electric vehicles, heat pumps and massive data centers, America’s electricity demand is rising. And as this demand ticks upward, there’s also a growing mismatch between the retirement of traditional sources of power — particularly coal plants — and the speed at which renewable systems can take their place.

There’s also another complication. After a decade of stubbornly cheap natural gas thanks to the shale revolution, gas price volatility has returned as more and more gas production is exported overseas.

According to the Wall Street Journal, last year was the most volatile on record for U.S. natural gas. In fact, gas prices surged to 14-year highs. Consequently, home heating prices soared, manufacturers faced crushing costs, and homeowners paid much higher electricity bills.

The ripple effects of these rising gas prices are now being felt nationwide. Florida Power & Light, for example, plans to charge its customers an extra $2.1 billion to cover higher fuel costs. And Massachusetts’ largest utility, National Grid, recently raised residential electricity rates 64% to account for higher gas prices.

America’s heavy shift to natural gas over the past decade — along with a loss of balance in the nation’s electricity mix — is taking a toll. In the past, when natural gas prices surged, utilities would use more coal to shield consumers from higher rates. But that’s largely not possible any longer, since forced coal plant retirements have left utilities with fewer options. This is most apparent during periods of peak demand. Gas prices can surge during bitterly cold, cloudy, and windless days — when wind turbines and solar panels are of little help. That leaves utilities with little choice but to use more gas — regardless of price.

It’s tempting to believe that the rapid addition of wind and solar power could address this problem. But grid operators and utilities are already warning otherwise. Consider PJM, which operates the nation’s largest electricity market for 65 million Americans from Chicago to Washington, DC. PJM recently warned that U.S. Environmental Protection Agency (EPA) regulations aimed at America’s remaining coal fleet could dismantle far more reliable generating capacity in the next few years than utilities can add back. This poses serious concerns about potential blackouts. It also means consumers will be further tied to the natural gas rollercoaster.

There’s no silver bullet to shield consumers from rising electricity prices and gas volatility. But there is a way to stop some of this self-imposed harm. Policymakers need to take back the reins of energy policy from the EPA and ensure that what balance remains in the nation’s electricity grid is preserved — not pushed aside before reliable and affordable alternatives are in place.

See the article here.