By Phil Van Horne
Electricity prices in Western New York took an unexpected jump in August and the rise has continued. The rest of New York did not experience a similar increase and for the first time in 50 or more years, Western New York is not enjoying the lowest electricity prices in the state.
The immediate cause of this rise is the fact that the high-voltage transmission lines that carry power to the rest of the state are at their capacity much of the day. One significant underlying cause of this is the termination of electricity production at the coal-fired power plant in Dunkirk.
The reasons behind the plant shutdown are numerous, but the final straw was new federal emission limits that became too expensive for the plant owner to make the necessary investments in an aging facility.
The power transmission network in New York was designed and built to accommodate the location of power plants. Taking a large plant permanently out of service has “twisted” the transmission system into an operating condition that was not anticipated when the lines were built in the 1960s and ’70s.
This condition leads to limits on other plant production and causes less efficient power plants to be necessary to rebalance the network. These less efficient plants result in higher costs.
For typical residential consumers in the Western New York region, electricity bills are rising by $20 to $35 per month. These increased costs are due just to the increased market prices and are not related to any underlying change in utility delivery charges. While some contracts may temporarily shield consumers from seeing the increases, all consumers in Western New York will pay these increased charges.
Individual electricity use is increasing: The typical U.S. household has 14 electronic items plugged in, and residential air conditioning has risen from roughly 30 percent of homes in 1985 to 85 percent of homes today. While individual appliances have greatly improved efficiency, there are more appliances than ever before.
The solutions to the transmission constraints will be either in upgrades to the system itself or new gas-fired power plants, located to better utilize the existing transmission infrastructure. Both of these solutions are subject to extensive reviews and approvals and thus are not immediate impacts.
Improved metering and operational optimization of the system will help somewhat, but those opportunities are limited.
In the meantime, consumers and business in the region are going to be paying higher electricity prices. The costs associated with regulations that caused the shutdown of the Dunkirk plant are now being realized and paid for locally.
Phil Van Horne is president and CEO of BlueRock Energy.