Historically low energy prices can’t last

by Diane Benjamin

If you get electricity from a co-op like CornBelt Electric, you probably get Illinois County Living magazine every month.  The October Edition has a scary commentary – title is the the same as this post.  It was written by Mark Pruitt, former Director of the Illinois Power Agency, currently with Power Bureau , LLC, an energy consulting firm.

I’m sure you remember this video:

Congress rejected Cap & Trade, so Obama has been using the EPA to shut down coal fired power plants – thus laying off thousands of coal miners.

Back to the commentary:


Electricity prices are driven by multiple elements including generation supply, transmission, and distribution.

On the generation supply side there is significant potential for base load generation retirement, and the rate of public plant closure announcements is increasing.

Like I said, coal plants are being shut down across the country.

Can the effects of these retirements be offset by new renewable generation?  Likely not, because 50 megawatts of wind or solar generating capacity is not the same as 50 megawatts if dispatchable generation.  Renewables may be the preferred policy option today, but they’re not the total solution to replacing lost base load generation.

So where will replacement generation come from?  Frankly, I don’t know, because that’s a policy issue that has been ignored for the last 15 years in the deregulated states. We don’t have a mechanism in the deregulated world to build new base load power plants.  

So, we have a situation where generating capacity is going off line but we don’t have new capacity coming  on line.  I think we can all agree that this will cause upward price pressure.  More importantly, an economic recovery will drive up energy demand.  At the first sign of true economic recovery I expect to see a lot of upward price pressure in the electricity market.

So Obama is getting his wish.  Limit supply, prices skyrocket making wind and solar look better.  The problem is they DON’T generate the same constant supply or high enough volumes of electricity.   Unless the subsidies continue, companies can’t afford to erect wind turbines or place solar panels.  It’s us that will be forced to pay higher prices.

The commentary also includes information on municipal aggregation.  Any savings achieved there is  temporary.

There is only one solution:  Don’t vote for the guy who caused this mess.  Maybe most of the coal plants still operating can be spared.

Here’s a link to the entire commentary:  http://icl.coop/historically-low-energy-prices-cant-last/

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