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by Share Brandt

Defining Affordability

Hard economic times have folks on edge, forcing many to make difficult choices on what bills to pay each month. To complicate things, the Environmental Protection Agency is set to release new regulations on greenhouse gases for fossil-fuel power plants that, if poorly developed, could dramatically increase the cost of electricity.

In all of this, electric cooperative members across the country agree on one thing: There’s not enough money to go around. This is what I heard from co-op members during my co-op annual meeting visits.

“Our next-door neighbor is 77, and her husband died a year ago in February,” recalled an Oakdale Electric member. “Now all she lives on is her Social Security. I looked in on her one hot July day last year and her windows were open—it was 90 degrees out and her windows were open! So I went over there and I said, ‘Shirley, what’s up with this, is your air conditioner broken?’ She replied, ‘Jean, I can’t afford to run it. I don’t have the money.’”

“My wife and I are retired but still young enough that we’re working part time,” said a Rock Energy Cooperative member in Janesville. “We can probably absorb electricity cost shifts right now. But as time goes on it will become more and more difficult to deal with dramatic increases. We need to have a national plan that provides clean, affordable—and that’s the key word, affordable—energy.” Recouping Investment Why the Rise in Rates? When I explain this to folks, I like to compare the factors behind rising electricity rates to buying a car. Co-ops have made huge investments to improve the environment in generation capacity built decades ago. We need to allow those plants to operate to recapture the costs of those investments. It’s like a car that’s paid for. To replace it with a new one will be more expensive.

Buying a car burdens a household budget, but generally only for a short time. While major repairs may be needed occasionally and gas remains a regular expense, the vehicle continues to provide reliable transportation for many years after the last payment is made.

Costs for electricity are similar. It’s expensive to build a power plant. But once it’s paid for consumers can rely on a facility that will continue to churn out reliable, affordable electricity for decades to come.

The United States last went through a power-plant building surge—and corresponding spike in electric rates—in the late 1970s and early ’80s as the nation struggled to make itself energy independent when it came to electricity.

When more electricity was needed in the mid- to late-1990s, “peaking” units were installed to produce power only when large numbers of consumers needed it. The majority of these units were fueled by natural gas, a fast and cheap way of “putting iron in the ground.” Changing Energy Policy             President Obama issued an executive order in June outlining his Climate Action Plan that calls on the EPA to publish final greenhouse gas emissions standards for electric generating plants by June 1, 2015. We will be urging the EPA to craft energy and climate change policies that will support a diverse mix of power generation while keeping rates affordable. Rising energy costs demand solutions that keep consumers in mind.