coal

Traditional utility companies are blocking renewable energy every step of the way.

Nuclear power is getting a lifeline. On August 1, in acontroversial decision, New York State’s Public Service Commission voted to approve subsidies to all nuclear power plants in the state. The estimated eventual cost to electricity customers in the state is over $7 billion. Most of the bailout money will be channeled toward Exelon and Entergy — two large electric utility companies that have threatened to close down some of the reactors they were operating in the state.

Plant closures are increasingly common in the nuclear sector these days. Not counting the New York State reactors that have been given a lifeline, over the last three years, electrical utilities have decided toshut down thirteen nuclear reactors deemed economically uncompetitive, and the number of closures is expected to grow.

Coal plants are also flagging. The use of coal for electricity generation in the United States has fallen substantially in the last decade, from 50 percent in 2005 to 33 percent in 2015. More than 660 coal units have been retired since 2010, and of the more than 150 new coal plants proposed since 2000, the vast majority has been cancelled.

Why are these power plants shutting down? In essence, the costs of maintaining aged nuclear reactors and coal plants are rising while the costs of renewable energy production using solar photovoltaics and land-based wind turbines are declining.

Likewise, falling natural gas prices from hydraulic fracturing (fracking) have resulted in gas-fired generating stations producing cheaper electricity. And because the total sale of electricity in the United States has been growing very slowly (only 1.5 percent over the last decade, as compared to 24 percent in the 1990s), new sources of electricity supply end up competing directly with existing sources of generation.

All of this sounds like good news, at least for those desiring a clean energy future. Shutdowns and other changes in energy production and consumption are chipping away at US emission levels. As President Obama triumphantly announced in August 2015:

This generation of Americans is hammering into place the high-tech foundations of a clean energy age.  It’s the same people who first harnessed the power of the atom, the power of the sun; the same spirit of people who connected the continent by road and by rail, who connected the world through our science and our imaginations; the same people who set foot on the Moon, and put a rover on Mars, and probes the farthest reaches of our solar system. That’s what Americans do.  We can do anything.

So, is the United States creating a new electricity supply system that will provide affordable energy and mitigate climate change?

Unfortunately, no — at least at the moment. The electric utility companies that control electricity generation in the United States are standing squarely in the way of such an energy future.

Playing the Market

Conventional electricity generation is expensive business. The average market capitalization of any power-generating utility that trades on the New York Stock Exchange is about $15 billion, with the big ones running up to $50 or even $60 billion. Electric utilities employ thousands of employees and contribute significantly to local tax bases.

As a result of these characteristics, utilities possess substantial economic and political power and they are consolidating this power and capital through mergers and acquisitions.

The example of Ohio-based FirstEnergy Corporation is a good illustration of the many ways in which utilities have utilized these powers.

 

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