Gas Producers Ask: Why is Congress Considering Mandates that Raise Electricity Prices, Degrade the Environment, and Reduce Use of A Domestic Fuel?

NATURAL GAS SUPPLY ASSOCIATION

805 15th Street N.W., Suite 510
Washington, D.C. 20005

FOR IMMEDIATE RELEASE
DATE: June 5, 1997

CONTACT: Charlotte LeGates

PHONE:202/326-9316

FAX: 202/326-9334

Gas Producers Ask: Why is Congress Considering Mandates that Raise Electricity Prices, Degrade the Environment, and Reduce Use of A Domestic Fuel?

Washington, DC -- The Natural Gas Supply Association has called on members of Congress to reject bills now under consideration that would mandate use of renewable energy.

"Mandates are never a good idea," said NGSA President Nicholas Bush. "They distort markets and, by protecting some products and services from competition, force consumer prices up.

"And in this case, those prices are amazingly high," he continued.

"Renewable energy sources like solar and wind power are reasonable alternatives for those willing and able to pay for their high cost," Bush said. "And biomass can be viable in geographic regions that can accept the accompanying pollution problems.

"Mandates are not necessary to encourage consumers to purchase appropriate renewable energy," Bush continued. "A number of electric utilities are offering customers a renewables option." Bush cited recent announcements by AllEnergy Marketing Co. (a marketing joint venture that includes New England Electric System) and Arizona Public Service as just two recent examples of the increasing initiatives that ensure that consumers have access to wind, solar, and other less conventional forms of electricity. "As competition in the electricity market grows, consumers are likely to have increasing options. We fully support this development, so long as the costs are not subsidized by those who choose not to participate," Bush said.

"But it is unconscionable for Congress to consider forcing typical consumers to pay 10 percent, 12 percent, or even more for electricity than they otherwise would," he continued. "That turns renewables into budget-busters." Bush cited government figures* that show that:

Electricity generated using clean-burning, domestic natural gas in a combined-cycle technology costs 3.3 cents per kilowatt hour (kWh). In most cases, natural gas combined-cycle technology produces electricity with the least total cost of any form of generation other than hydropower.

Electricity from wind power costs about 25 percent more than gas-fired electricity--4.1 cents/kWh. And because it is unreliable (when the wind stops blowing), it must be backed up with other types of generating capacity that are underused and therefore expensive to finance and maintain.

Electricity from biomass costs 6.1 cents/kWh--almost twice as much as natural-gas-fired electricity.

Electricity from solar photovoltaic technology costs $1.47/kWh--almost 45 times as much as electricity .

Several bills in Congress would include mandated use of renewable resources other than hydropower for up to 20 percent of all U.S. electricity generation. Currently, about 3 percent of electricity comes from non-hydro renewables.

NGSA's gas-producing member companies oppose renewables mandates for two reasons:

Consumers, producers, and the country as a whole receive economic benefits when consumers can choose fuels based on their cost and other attributes, and when no generator can use subsidies or market protections to allow costs to rise needlessly.

Mandated use of renewables has the strong potential to block natural-gas-fired electricity from the marketplace. (This is further explained in a study NGSA commissioned from Charles River Associates.**)

"If Congress mandates the use of renewables," Bush said, "electricity generators are likely to use biomass because it is the only reliable form of renewable generation. And since biomass creates far more environmental problems than natural gas, the results are likely to be higher-priced electricity, environmental deterioration, and less use of a domestic fuel."

NGSA represents producers and marketers of domestic natural gas.

Note to Editors:

* Figures are from the 1997 Annual Energy Outlook of the Energy Information Administration (EIA), Department of Energy (DoE).

** The complete study is available from the NGSA receptionist, 202/326-9300, or on the NGSA web site <www.ngsa.org>.

*** This is the first in a series of NGSA Consumer-oriented Press releases to help the general public understand the implications of a renewables mandate.

This page was last updated August 31, 1997.