Consumers start feeling higher costs of clean fuel

Consumers already are starting to feel at least a modest pinch in their electric bills. The impact is expected to grow
in the next few years as utilities accelerate their investments to meet state quotas requiring a portion of clean energy
in their generation mix. And bills in Congress would impose a similar national quota, an idea President Obama supports.

The cost is one reason electric rates have been fairly stable as oil and natural gas prices have plunged.

Until recently, clean energy didn't noticeably affect rates because it accounts for just 3% of U.S. power generation.
That's changing as utilities scramble to meet state quotas.

Among rate increases:

• In Arizona, Tucson Electric Power in January raised rates 6%, or $4.29 a month for an average customer, to fund new
solar power to meet state quotas. Solar is pricey, costing more than twice as much as natural-gas-fired electricity.
And since Arizona has surplus natural-gas power, the solar energy is not replacing generators that would be built
otherwise.

• In Oregon, Portland General Electric is seeking a 2.3% rate increase to raise the annual $41.3 million needed to
fund construction of a big wind farm.

• In Texas, the prices Austin Energy pays for wind power more than doubled recently. The reasons: strict state renewable
quotas that drive up demand and high costs to deliver wind energy from West Texas.
Customer charges could again rise next year.

• California has among the highest electric rates, partly because it requires 20% clean energy by 2010. And with the
most accessible green power tapped, Southern California Edison is spending $2 billion to build lines to deliver wind
energy from remote areas. It's also developing expensive solar power.

Renewable energy is deemed a bargain, as there are no fuel costs. But since it's spotty, utilities must set aside
conventional power as backup and build lines to deliver clean power from far away. Wind power is 30% more costly
than natural-gas-fired energy after figuring those costs and assuming moderate gas prices. A U.S. standard requiring
20% clean energy by 2020 could boost electric rates about 15%, vs. building standard power.