My Take On Ohio’s Energy Efficiency Fiasco

DUKE001Robert Michaels wrote an interesting post on Mercatus called Ohio’s Energy Efficiency Fiasco. Since I complained about rising electrical rates in 2012 and 2013 I was fascinated that a Northern Virginia college would publish a paper by a professor of economics at California State University about Ohio electrical rates. Talk about strange bedfellows! In 2012 I was ready to complain to state officials about the electric rate increase when I realized that my problems were pretty minor compared to problems faced by several public school districts whose budgets were blown out of the water with the rate increase. Despite all of the fervor I can say that not much has changed. My bill is much higher and Duke is inordinately interested in getting me to buy light bulbs from them. Here is the junk mail I got from Duke last week. So what could have gotten Mr. Michaels and Mercatus all upset?

It seems that Mr. Michaels is concerned about free riders. Here is an example.

Free riders are subsidized by higher bills for other consumers. Despite hopes that the EERS would encourage efficiency innovation that would produce “green jobs,” since the EERS became law there has been very little such innovation. Instead, utilities have relied heavily on lighting-related discounts for compliance. For some utilities in some years these discounts have accounted for more than 80 percent of EERS expenditures.

RateChange1The problem for these utilities is that I still have plenty of CFLs I bought three years ago so I do not need anymore. He also complains about “riders” added to the distribution portion of the electrical bill to satisfy the whims of certain advocacy groups. My latest Duke electric bill shows that the combination of the delivery and generation riders is now 42% of my delivery charge. It really irks me that my electric bill keeps going up despite lower fossil fuel costs and improvements I made in energy efficiency. The problem is with distribution rate increases. Here is a graph of my annual electrical rate increases. It looks like the stupidity has subsided so why is Mercatus still interested?

I think Mercatus is interested in the legislative fight to alter the renewable and energy efficiency mandates in Senate Bill 221 enacted by legislators in 2008. Many states have similar mandates but Ohio seems to be particularly foolish in writing S.B. 221. The supporters of S.B. 221 say these subsidies have created a renewable energy industry and the bill was about creating jobs. State Senator Bill Seitz begs to differ and told members of the Senate Public Utilities Committee, “Simply put, the economic projections upon which (S.B. 221) was based have turned out to be wrong.” I think the quickest way to get up to speed on the economic predictions upon which S.B. 221 was based is to read Jonathan Lesser’s study, Ohio’s Electricity Usage Reduction Mandate: The “Free Lunch” Paid for by Ohio Consumers. In that article Mr. Lesser says that since S.B. 221 mandates reduced electrical usage, it expects that electrical generation rates will go down. The economic logic used to justify S.B. 221 is that since the retail customer is saving money on these presumed generation rate decreases they can easily afford to subsidize renewable energy and energy efficiency projects paid for by the riders included in the distribution rates. The problem is that delivery rate increases far exceeded any savings I got from generation rate decreases. If the only renewable energy job created is to send me junk mail about CFLs, I think we can safely say that it has failed and it is time to work with businesses to change the renewable and energy efficiency mandates. The good people of Ohio can only go so far with bad legislation.

Why are we not seeing more inflation?

I got my latest Duke Energy bill and added to my spreadsheet to analyze the cost increases. In 2013 we spent an additional $338 compared to last year. Some of the cost increase can be attributed to 18% more heating days than last year but about $200 of this increase is a result of higher electrical distribution costs. So far 2013 I have seen higher home and health insurance costs, higher income taxes, and higher electrical costs. Although my health insurance is more expensive, the costs are still covered by my HRA at work. I have not seen any costs that have come in lower than last year. Hmm…

Happiness is an Emergency Power System that Works!


Last year was a particularly difficult electric power year for us. In the last 13 years we probably had four outages that lasted more than 24 hours. It happened so infrequently we kept the generator in the back of the barn. Last year we had four 24+ hour outages. The big problem for us is that we get our water from a cistern. That means that we need electricity to pump water. Ten years ago we had a transfer switch installed so we could safely use a generator to power 6 circuits that included the pumps. It was a Generac transfer switch with a double throw switch for each circuit. During the third power outage I hooked up the generator and it immediately tripped the breaker on the generator. My wife decided it must be the generator since our generator was ten years old and went out and bought a new generator. With this new generator we keep it in a much more convenient location to the transfer panel. I can roll out the generator and hook it up to the transfer panel in about five minutes. On December 23rd we had our fourth 24+ hour power outage. I hooked up the new generator and the breaker tripped whenever I tried to turn on a circuit. A circuit providing power to the water was not functioning whether it was connected to the generator or the utility power. Now I knew that the Generac transfer switch had a serious problem. I performed some emergency wiring to get power back to the pump. Two days after Christmas our electrician came out and confirmed that we had a problem with the transfer switch and cleaned up my temporary wiring. Last Friday we finally got our new transfer switch installed. The electrician replaced the Generac unit with a GE Power Transfer switch and a new electrical sub panel. This a more industrial looking solution so I have a warm, fuzzy feeling that this solution will be more reliable. I stayed home on Friday to test the switch and verify that the circuits were working. It worked. I was curious about the price of the transfer switch. I found it at Home Depot and Lowes for $118. This looks like a cost competitive and more reliable solution compared to the Generac prewired solutions.

100 Amp 240-Volt Non-Fused Emergency Power Transfer Switch-TC10323R at The Home Depot.

Why are Distribution Costs going up so fast?

In my last post of energy conservation, June Follow up on Green Technology that pays for itself, I was surprised to find that my energy savings were being overwhelmed by electrical rate increases. This bothered me on several different levels. Naturally I was disappointed I was spending more for the same amount of electricity while my wages stagnate. The more curious problem was why did my rate go up when the price of natural gas and coal go down?

Yesterday I went through my electrical bills and added up my delivery and generation costs for the first five months of the year. I divided these two numbers by the total electricity used to come up with an average delivery and generation rate. I did the same for the first five months of last year, too. My delivery rate went up 18.3% while my generation rate went down ”“17.7%. The lower generation rate makes since it was highly influenced by the higher winter rate in January and February of 2011. The higher delivery rate does not make sense. This increase is much higher than inflation. What did Duke spend the money on?