DV Journal

It could be a cruel summer for millions of Americans who are not only paying big energy bills but also worried the AC will conk out.

That is because energy experts warn, several regions face potential blackouts and much higher utility bills. The Midwest electric grid has “a high risk” of failure according to the North American Electricity Reliability Corporation (NERC) in its Summer Reliability Assessment report. The report also warns the West Coast, and Texas could have blackouts while rates skyrocket.

In mid-June, utility power providers were warning that hot weather could lead to “capacity problems on the grid.”

Part of the problem, said John Moura, NERC Director of Reliability Assessments and System Analysis, is the rapid remaking of the nation’s electrical grid will pose challenges to grid reliability over the next decade. Recent blackouts in California and Texas, “should serve as a wake-up call for the rest of the country,” Moura said.

Americans are waking up to the problem, said another energy group.

A poll by The National Mining Association (NMA) found about 8 in 10 voters–including a majority of Democrats, Republicans, and independents–want the government to prevent premature closings of functioning power plants until replacement generating capacity is online. The poll found that 9 in 10 voters are concerned about rising electricity rates.

Voters were also asked if the U.S. should ramp up coal production to ease Europe’s dependence on Russian coal for steelmaking and electricity generation. Some 60 percent want greater U.S. coal production, the poll noted.

“Americans are deeply concerned that they are paying far more for a supply of electricity that is less reliable than ever before. With grid reliability deteriorating, energy inflation soaring and the threat of blackouts now a reality for tens of millions of Americans, it’s time for an energy policy reset,” said NMA President and CEO Rich Nolan.

An energy industry business coalition says blame sticker shock on U.S. regulatory policies.

“The rise in electricity prices is, unfortunately, much too predictable considering the energy policies of the past two Democratic administrations promised–and have since delivered–Americans. Between Presidents Barack Obama and Joe Biden, they have forced the shuttering of power plants across the country, made the siting and construction of transmission lines virtually impossible, stopped pipeline expansion, and closed off domestic energy production,” argues Craig Stevens, a spokesman for the group “Grow America’s Infrastructure Now.”

A spokesman for the U.S. Department of Energy did not respond to repeated requests for comment.

Besides energy availability, price is also a problem, a regulator noted.

The Federal Energy Regulatory Commission says electricity prices for June through September in the California, New England, and Texas markets rose 77 percent to 223 percent from last year’s prices. Those numbers came from the U.S. Energy Information Administration (EIA). In its latest “Short Term Energy Outlook” issue, it forecasts electricity prices in the Northeast regions will double. They will exceed $100 per megawatt-hour between June and August. That is up from an average of about $50/MWh last summer.

EIA pointed to the high price of natural gas as a cause of price hikes, as well as constraints on fuel switching to coal from “continued coal capacity retirements, constraints in fuel delivery to coal plants and lower than average stocks at coal plants. New England is feeling the heat of higher prices.

For example, New Hampshire ratepayers will soon dig deeper. Liberty Utilities is seeking approval for an increase in the default residential energy rate from 8.393 cents per kilowatt-hours to 22.223 cents per kilowatt-hours, according to a Public Utilities Commission filing.

Granite Staters using Liberty will pay about 50 percent more for electricity when the new rate takes effect in August, says Donald Kreis with New Hampshire’s Office of Consumer Advocate.

Is there a solution?

NMA spokesman Conor Bernstein said while there is no immediate answer, long-term national policy should be to use domestic energy resources.

“Getting us to our energy future shouldn’t mean disassembling affordability and reliability along the way,” Bernstein contends. “This global energy crisis has underscored the need for U.S. energy leadership and, as this polling clearly shows, Americans recognize the critically important role American coal can play in reinforcing our energy security and that of our allies and they want their elected officials to take action.”

Bernstein also blamed the EPA. “It wants to use every tool in its toolbox to accelerate coal plant retirements. That’s an agenda, that will only exacerbate the reliability and affordability challenges already gripping the country. Doubling down on that approach is insanity.”

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Notorious for its crime and its outrageous cost of living, California seems an odd choice for Pennsylvania to mimic. And yet, with the adoption of California’s onerous electric vehicle rules, the commonwealth would be doing just that.

The Pennsylvania Department of Environmental Protection has submitted a proposal for wholesale adoption of the California Air Resources Board’s electric vehicle (EV) program. The California rules import would impose new requirements on automakers and dealerships to stock lots with EVs.

In essence, the combined California-Pennsylvania mandate would command automakers to deliver increasing numbers of EVs for sale in Pennsylvania each year. Should they fail to meet the quotas, automakers will be required to buy credits from others that have banked them, like EV-only Tesla. There’s little doubt that adopting the California program would result in more EV proliferation. In the most recent data year, more than 7 percent of the new cars sold in California were EVs, leading the nation as a percentage of sales and pushing the cumulative number of EVs on the state’s roads to nearly half a million. But does the value-add of the program exceed the additional costs to the auto industry that eventually filter down to all of us? The evidence says no.

One commonly peddled myth about California’s EV program is that it increases consumer choice. The truth is there’s no barrier to EV purchases as it is and EV sales are already growing. In the last three years, the number of EV registrations in Pennsylvania has tripled.

While for some families, especially those with smaller budgets or more kids, EVs make little sense; for others, EVs are a smart choice, particularly if they have the luxury of another longer-ranger vehicle for road trips. In the open market, EVs have already earned a significant share of sales and are here to stay. They don’t need more help.

The great irony is the world’s leading electric vehicle mogul, Elon Musk, agrees. According to Musk, the government should “get out of the way and not impede progress,” serving more as a “referee” and less as a “player on the field.”

Of course, Pennsylvania’s adoption of California’s rules would be just one small part of a larger government push for EVs. Other parts of this agenda include the existing $7,500 tax credit for the wealthy car buyers who choose to go electric and the proposed $7.5 billion of spending on subsidized EV charging stations.

“Rules and regulations are immortal,” Musk said at The Wall Street Journal’s December CEO Council event. “They don’t die. The vast majority of rules and regulations live forever … there’s not really an effective garbage collection system for removing rules and regulations, so this hardens the arteries of civilization where you are able to do less and less over time.”

Convoluted programs like California’s EV rules are prime exhibits of this odious phenomenon, clogging our economy with red tape that only drives up costs.

No state shows the harms of government tangles like California. Ranking 48th in the Cato Institute’s state economic freedom list, California also has the highest poverty rate in the country and is among the states with the highest levels of income inequality.

EV subsidies and requirements do nothing to resolve these issues, and likely make them worse. With its requirements on automakers and dealers and its extensive state subsidies for buyers, California policy is shifting the cost of expensive EVs onto the general public, despite the fact that EV buyers are far richer than average.

While just over 30 percent of U.S. households have an annual income in excess of $100,000, more than 55 percent of new EV buyers do. Even looking at the used car market, the EV purchases skew severely towards the rich. In California for example, the average income of a used EV buyer is 66 percent higher than the average income of someone buying a conventional used car.

Adding insult to injury, EV evangelists like Transportation Secretary Pete Buttigieg tout the savings a household will benefit from in the absence of weekly tank fill-ups, seemingly forgetting that the average household cannot afford the delta in upfront purchase costs between expensive EVs and more affordable, comparable, conventional cars. Compounding this injustice, California taxes gasoline purchases at the highest clip in the nation while giving wealthy EV drivers a free pass to use the same infrastructure shared by everyone.

EV policies are a microcosm of California’s two-tiered society. It’s not a model Pennsylvania should follow.