Removing Coal from the Energy Mix
In 2013, President Obama's Climate Action Plan laid out a plan to make the U.S. a leader in the effort to address global climate change. In June 2014, the Environmental Protection Agency (EPA) promulgated rules for cutting carbon dioxide emissions from existing power plants. One option to cut carbon emissions allowed by the EPA is for states to switch from coal-fired to natural-gas-fired electricity generation. Although the EPA's recent rule might lead some to believe that the shift will occur in the future, some companies are already shutting down their Wyoming coal plants and replacing them with natural gas.
What has this meant for the electricity bills of Wyoming families?
Cheyenne Light Fuel and Power (CLFP) is the public utility that enjoys the electricity monopoly in Cheyenne. It produces 36 percent of its electricity from coal-fired plants, four percent from gas, oil and wind, and purchases 40 percent of its power from other sellers. At CLFP, electricity from coal costs $10.89 per megawatt hour to produce and $53.33 per megawatt hour for electricity produced by natural gas.
Should all CLFP's coal-fired electricity production be replaced by natural gas, electricity cost for the average family home will double.
At this time, the electricity bill of a typical family home in Cheyenne includes eight charges, only one of which is for energy. First, a family pays a flat Service & Facility Chargeof $13. This covers some of CLFP's fixed costs such as local connection, facilities, metering equipment, billing and accounting, and a portion of the distribution system. The family then pays the energy charge of $0.09990 per kilowatt hour (KWh). The Power Cost Adjustment (PCA) charge, used to cover higher costs to deliver power to the home than what the company factored into its base energy charge, is $0.00438 per KWh and the Demand Side Management (DSM) charge is $0.00080 per KWh. The DSM charge covers the utility's cost to promote conservation and/or energy efficiency. In other words, you are paying the utility to convince you to use less energy.
The electricity cost for a family using 621 kilowatt hours of energy in 32 days, before taxes is $78.25.
But it doesn't end there. Families pay a two percent franchise fee, which pays for the tax paid by the utility to the municipality to provide services in Cheyenne. In other words, families pay an additional tax to the city through their utility bill to have CLFP provide them with a service they have no choice but to take.
Families are also hit with a one percent County Sales Tax paid on all the charges mentioned so far, including the franchise fee, as are the 4 percent State Sales Tax and the Special County Option tax (currently zero). In other words, in addition to a tax on the cost of electricity and all the additional charges related to getting electricity at home, families are paying taxes on a tax. This tax grab adds $3.99 to a family's electricity bill, bringing the family's total for the month to $83.81.
What happens when gas-fired electricity plants, which produce electricity at $53.33 per megawatt hour, replace existing coal-fired plants, which produce electricity at $10.89 per megawatt hour? The flat Service & Facility Charge of $13 stays the same but all the other charges will likely go up because of the higher cost of energy, which rises by 141 percent to $0.24072. Assuming these charges are proportionate to the increased cost of producing electricity, the subtotal at this point comes to $169.54, a 116.65 percent increase over the previous coal-included scenario.
But it gets worse. Because taxes are based on a percentage of all the costs mentioned, the amount of tax the family pays to the government also goes up. The franchise fee paid on the energy, PCA and DSM charge, which all likely rise, is higher, and the County, State and Special County Option taxes are paid on those higher charges, plus the now higher franchise fee. The tax paid also rises by 116.65 percent, to $8.68 and the grand total for the month, after tax, soars to from $83.81 to $181.58, more than twice as much as the previous coal-included scenario.
The federal government's current obsession with hot air threatens to leave Wyoming families freezing in the dark and facing tax hikes of over 100 percent. Instead of bending over and succumbing to dictates of the climate class, it is time for Wyoming voters, and their political representatives, to stand up for climate reason.
Maureen Bader, Wyoming Liberty Group
This commentary is free and provided to media outlets and opinion leaders by the Wyoming Liberty Group for reprint. The Wyoming Liberty Group is a 501(c)(3) nonprofit, non-partisan research organization. The Group's mission is to prepare citizens for informed, active and confident involvement in local and state government and to provide a venue for understanding public issues in light of constitutional principles and government accountability.