Like many folks all over Kentucky, my electric bill last month was a shock. It was one of the highest bills I’ve ever had. In fact, if it wasn’t for the solar panels I installed it would have been my highest bill ever. What happened?
Attorney General Daniel Cameron wrote an op-ed last week blaming the Biden Administration’s green energy policies, but if we dig a little deeper we can see that what really happened has more to do with economics than politics. Mr. Cameron was right about this: our bills went up largely because of the “fuel adjustment” charge on the bill. When utilities have to pay more for the fuel they use to generate electricity, they are allowed to pass that cost on to their customers.
The energy costs used to calculate the fuel adjustment don’t hit the utilities’ billing cycle for two months, so the increased cost on our January bills actually came from a spike in prices last fall. There are a lot of factors that drove up those prices, but the long and short of it is simply supply and demand.
As the US began to produce more natural gas over the past 20 years, the price of gas went down. That encouraged utilities to use more natural gas and less coal. We are well aware of how cheap natural gas affected the coal industry in Kentucky, particularly in 2012 when gas became cheaper than coal for the first time.
As the US began to produce a surplus of natural gas, we increased our exports and became the largest exporter of liquid natural gas in the world. One result of that shift is that our natural gas prices are now more directly tied to global markets, including the sharp rise in natural gas prices last fall.
With the Russian invasion of Ukraine, we will certainly see more disruption in global energy markets, and we will see further impacts on prices here at home. That’s going to cause real pain for everyday Kentuckians. One thing we can do, and need to do, is reduce our dependence on fossil fuels and increase our use of renewable energy. Kentucky Utilities, East Kentucky Power Cooperative and Duke Energy have all built large solar farms, and that’s a good start. We can accelerate our progress away from fossil fuels by putting more solar panels on the roofs of homes, businesses, schools and nonprofits.
The Mountain Association, where I work, has helped dozens of businesses and nonprofits in Eastern Kentucky install solar panels, reducing and stabilizing their energy costs. Along with energy efficiency retrofits that we have supported, our clients are saving more than $1.2 million in energy costs per year. That helps them keep their doors open and save money on their utility bills—savings that can be passed along to their customers. Currently we are offering free solar assessments and energy efficiency audits for businesses, nonprofits and local governments in Eastern Kentucky, and we can also help with finding qualified installers for solar and energy efficiency.
When we get hit with high utility bills, we all want to know what happened. I’m glad the Attorney General shares our concern about rising energy costs for Kentuckians. But it’s important to understand where the blame actually lies, and on that we respectfully disagree with Mr. Cameron’s politicized perspective. Still, there is a political dimension to this that does matter: we need state and federal policies that support the shift away from fossil fuels so that we don’t keep getting hammered by wild swings in the price of oil and gas.
The savings from my solar panels helped offset the cost of the fuel adjustment on my bill, and that was good for me. But on sunny days when my panels were feeding energy back into the grid my neighbors were able to use that excess electricity, and that’s good for everyone, because solar energy fed into the grid doesn’t come with a fuel charge. More clean energy for more Kentuckians is one of the keys to building the brighter future we all want to see.