Tuesday, January 5, 2010

Our low electrical rates cause more CO2 emissions

The power we generate in BC is low in CO2 emissions, but the grid we are part of, the Western Interconnection, is not. As long as we have electrical rates that are artificially low, we will use more power than we need. In recent years BC has normally used more electricity than we generate. The extra power we need comes from gas or coal fired power from elsewhere in the west.

Building more capacity is one way to reach electrical self sufficiency by 2016, but reducing demand would achieve this as well. Once we produce more electrical power than we consume we can export the excess green power to others in the west.

If BC were to charge higher rates for power, the public will be much more motivated to conserve power. Higher rates will also mean that more green energy sources will become economically viable without needed market distorting government subsidies.

The current price BC Hydro residential customers pay is $0.0591 per KWh for the first 1350 KWh in a two month period and then rising to $0.0827 for any power used over that amount. This is an average cost for a suburban home of about $0.065 a KWh. People in the BCFortis service area pay $0.07627 per KWh. These rates are the lowest any residential customers pay in the Western Interconnection.

BC should have a policy that the price of electricity in BC reflect rates in neighbouring markets. A mix of rates from Washington, Alberta, Idaho and Montana would make for a good basket
  • Washington – $0.086
  • Alberta – $0.089 average
  • Idaho – $0.086
  • Montana – $0.099

Average of the four = $0.09 per KWh

It is not unreasonable for BC to want to retain a competitive advantage, so reducing the cost by 10% of the average makes sense. Doing this gives us a price of $0.081 cents per KWh. This is still the cheapest power in the Western Interconnection but significantly higher than what we pay now. This higher price will quickly make conservation measures economical by making pay back times for the work less than three years.

The higher price should actually reduce demand for power in BC over a period of several years as people adjust to the higher price and change their habits to save money. We should see a leveling of total provincial demand for several years and then see a slower rate of increase than what has occurred in the last twenty years.

If we consume less power in BC there is more green power available for the rest of the Western Interconnection. By 2025, this should allow for BC to be using 10,000 to 15,000 GWh/yr less than it would without the price increase. That is enough power for between 750,000 and 1,250,000 people in California

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