Global Warming Examiner

How much should a utility company expect to pay for electricity from new electric power sources? This is really a key question that affects how much renewable energy sources a utility company is likely to build. To get the lowest price for new electricity production, a utility would like to build a coal-fired power plant. (Nuclear might be a cheap, but let’s assume the utility is not ready to take on the regulatory burden of building new nuclear plant.) Coal is a cheaper source of electricity than wind, solar, or natural gas production. A coal-fired power plant can be build close to the point of consumption. It is a known technology that provides great base-load characteristics (dependable 24 hour per day power).

The problem for utility companies now is that they can’t build new coal-fired power plants. There is a danger in building a coal-fired power plant that future restrictions on carbon emissions may result in the utility company not being able to produce as much electricity from the plant as they project. Due to the long time required to recover the capital investment in the plant, they need to be sure that the plant will be allowed to operate for its full expected life cycle. Public Utility Commissions (PUC) have not been willing to guarantee that the utility companies will be able to recover the cost of the plant in the event of carbon restrictions and the utility companies have been unwilling to risk their shareholder equity on these plants without a guarantee.