The pushback against alternative energy continues, with the latest argument being that since customers are paying for these facilities, there’s no sense in doing it.
The latest salvo comes from the Mississippi Center for Public Policy, which criticizes the state’s, and the nation’s, system of giving utilities a monopoly in specific territories in exchange for government regulation of pricing.
This system, contends investigative researcher Michelle Brodsky, does not provide proper market incentives for a company to keep prices low while still making money.
“When a price is set by the government and corporate bureaucrats, ... they work out what it costs them to produce it, and then add on their margin of around 10 percent,” Brodsky wrote. “This automatically removes the incentive to produce more efficiently.”
Her report correctly cites Mississippi Power Co.’s $7 billion boondoggle at its Kemper County lignite coal plant, which never worked as intended. But comparing relatively small ventures into solar electricity generation to that only makes a mountain out of a molehill.
The objection is that Entergy, which this month opened its largest solar farm in Sunflower County, has received permission from the PSC to add the construction costs of this facility to its customers’ monthly bills.
Entergy spent about $140 million to build its Sunflower County site. That will result in higher utility bills — an estimated $16.56 a year for the average Entergy residential customer. Even if other Entergy solar projects add to that cost, the increase is miniscule compared to what Mississippi Power tried to do with Kemper County.
The report asked if Entergy and the PSC would serve the public interest better by having the company itself — not customers — pay for the cost of solar construction. That is a valid question, as long as it is applied to all projects.
For example, has Entergy been allowed to add costs to customer bills for other power-generating projects? What happens if the company wants to build another natural gas generator or a nuclear power plant?
And more to the point, the biggest factor in rising electricity prices in the past year has not been the cost of renewable energy projects. It is the higher cost of the natural gas, oil and coal that utilities use to generate electricity.
Check the charts. From 2012 to 2020, the price of natural gas averaged about $4 per million BTUs. It rose above $6 only once, for two months in 2014. In 2020, at the start of the covid-19 pandemic, natural gas fell below $2, but then started rising. It hit $8.58 in May, its highest price since 2008, and now is below $7.
Entergy and all other utilities pass along to customers the price changes of their commodities, and this is one reason electricity is more expensive than it was a year ago. Has it not occurred to anyone with objections to solar power that over time, the cost of generating this electricity should be far more stable than relying on the oil and gas markets?
— Jack Ryan, McComb Enterprise-Journal
