What’s In Store for Power Utility Rates?

Burgeoning renewable energy and energy efficiency technologies not only have the potential to solve many of our long-term energy problems, but offer the promise of lower energy costs. Solar technologies are leading this transformation.

In 2007 alone, the solar industry received $3.2 billion in new equity from venture capital and private-equity firms, a sizable show of confidence. Advances in the production of photovoltaic panels has helped lower the cost of “going solar” for both the residential and commercial markets. Add to that, ever-rising utility rates and federal and state rebate and incentive programs, and “going solar” has never been more cost effective.

To get a better handle on the future facing utility consumers nationwide, one should look to the state of California. Why? California consumes more electricity than all but 12 of the largest countries in the world and is leading the charge in the United States to adopt solar energy.

California Utility Electricity Rates

From 1970 to 2004, energy rates in California have generally risen at times with great volatility. During some years, the rate hikes were dramatic. In fact since 1970, rates have rarely fallen. The biggest drop was an 11% decline during the recovery period after the California Energy Crisis.

While past events are unlikely to be repeated, future disruptive events will undoubtedly create similar, and perhaps greater, volatility.

A number of trends are expected to affect future power prices, including:

  • Dependence on natural gas-fueled power plants: California legislation bans construction of new coal- and nuclear-powered power plants. Natural gas-fired facilities provide roughly 41% of the state’s electricity needs. California, however, is located at the end of the supply line in the western United States, making domestic natural gas expensive as its availability a is strained by rising energy needs elsewhere.
  • The cost of carbon legislation: California legislation requires the reduction of carbon emissions by 2020. The cost of meeting these requirements, and expected federal regulations will make coal- and natural gas-powered power plants more expensive to run.
  • Hurtles to power plant development: Building materials and resources used to operate power plants, such as water, are becoming less available and more expensive. Widespread opposition to building fossil fuel plants, LNG facilities and transmission lines can scuttle projects entirely.
  • Liquefied natural gas (LNG) is a long way out: Imports of LNG are expected to supplement conventional natural gas sources and help stabilize prices in the long term. However, the facilities draw sharp environmental opposition. And should LNG from overseas become available in significant quantities, the expense could increase power rates.

History shows us that various economic and regulatory factors can have enormous impact on electricity rates. An investment in solar energy now will produce power for the next three decades, during which time some believe electricity prices will triple or even quadruple.

Whether it’s short term or the long run, investing in a renewable, clean system makes good economic and environmental sense.

In business since 1985, ROOFCORP can work with your organization or business to help you determine if a photovoltaic system is the right road to travel. We have the knowledge to tailor a system that meets your specific needs and recoups your investment. To learn more, contact us today.

ROOFCORP OF WA, P.O. Box 69315, 3425 S 146th St., Seattle, WA., 98168
Phone: 206.439.9991 Fax: 206.439.9995
ROOFCORP OF CA, 2130 S Dupont Dr., Anaheim, CA., 92806
Phone: 714.210.5993 Fax: 714.940.9917