Saturday, July 30, 2016

A Week That Was July 2016

What a week.  So much happening, and much of it already impacting, or will impact, topics that are of interest to me.  In no particular order, then, 

o  Hinkley Point C nuclear power plant in the UK is having another look for viability by the new government under Theresa May; seems the cost to construct is a bit too high and subsidies also too high; see link

o  California survived a second heat wave, with a second FlexAlert issued, even though the natural gas shortage is still in effect - Aliso Canyon gas storage system is not yet fixed; 

o  Meanwhile, California's solar power production broke all-time records at more than 8,000 MW; a very good thing to have when the grid is struggling to send power to the people; even more solar power is under construction in California; see figure at right from CAISO website showing 8,132 MW produced on 26 July 2016;

o  Pacific Ocean surface temperatures are plunging fast and are already in the La Niña condition (the El Neutral didn't last long, as the ocean switched from hot El Niño to cool La Niña very quickly); 

o  Sunspots disappeared completely a few days ago, for approximately 7 or 8 days; this is rather early in the sunspot cycle for a week or more of spotless days to occur; see link to and refer to left column of that site. As of today, 30 July 2016, the sun has had 18 spotless days in 2016. 

o  A serious doubt for the future of manned space exploration re-surfaced this past week, with evidence and a report that lunar astronauts suffer (and some have died) from much higher incidence of cardio vascular disease; almost none of the non-flying astronauts, nor the low-earth orbit astronauts have this; the explanation is exposure to intense deep-space radiation and ionizing high-energy particles (galactic cosmic rays) by those astronauts that flew past the Earth's Van Allen Belts and went to the moon.   This has deep implications for the proposed moon-orbiting manned space station, any manned Mars missions, and especially a Mars colony.   The long-term orbiting astronauts on the International Space Station provide valuable data on some medical aspects of space life, but that is all within the protective shield of the Van Allen Belts.  see link to Nature article on deep-space radiation effects on astronauts, "Apollo Lunar Astronauts Show Higher Cardiovascular Disease Mortality: Possible Deep Space Radiation Effects on the Vascular Endothelium"

o  As always, it is amusing to read the derogatory comments on other blogs, and find irrefutable evidence that the commenters are wrong; in this case, EIA published a nice map of the US' regional electrical grids that show multiple states tied together to share electricity; some idiot challenged a piece I wrote by his statement that a good utility never purchases power from outside its own geographic area.    Ronald Reagan's quote remains so true: "It's not that our ... friends don't know anything, but that so much of what they know just isn't so." see link to EIA article on US grids, and graphic nearby.   

o  In US politics, we have the unusual fact of a billionaire businessman outsider, Donald Trump, as the official Republican Party presidential nominee, and a rich, old, scandal-plagued, white female, Hillary Clinton, as the official Democrat Party presidential nominee.   Their respective views on climate change, energy policy, immigration, foreign affairs, and national security could not be more different.  

o  In the oil markets, world crude oil price is low and headed lower as the summer driving season ends; I tend to scoff at most so-called experts that tell us what crude oil price will be because they are almost without exception very wrong.  The fact is that oil production world-wide is much greater than oil demand, with recent reports showing huge inventory increases world-wide to support oil production rates.  Economic malaise and improved technology reduce oil demand, which will cause oil prices to plummet.   Just yesterday, pundits predicted prices of $30 per barrel after this summer ends.   I will be surprised if oil does not fall to $25 or even lower.  

 I hope to have time to write a full article with links to sources and explore each of these in more detail. 

Roger E. Sowell, Esq.
Marina del Rey, California

copyright (c) 2016 by Roger Sowell - all rights reserved

Sunday, July 3, 2016

A Perfect Correlation - US Electricity Price v Consumption

Subtitle: A Bit of Gathering Into Groups Gives Good Results

It is not often that one creates a graph using actual data and discovers an almost perfect linear relationship.   It is even more rare to have a software package calculate the least-squares trend line and obtain a correlation coefficient, R-squared, of 0.99 or higher.   Yet, that is exactly what occurred for data from calendar year 2014 for US residential electricity consumption per customer, and average price per kWh.    The graph and simple statistics are shown below, then a discussion.   Note the R-squared value of 0.9997, indicating an almost perfect correlation.  
Figure 1.   Data from US Energy Information Agency, by state
Shows 39 states, excludes 10 states with lowest prices and Hawaii
This article follows another SLB article (see link) that ascribes the relatively higher price for residential electricity in California compared to the US average to mild climate and large population.  Conventional wisdom is very wrong in blaming solar power and wind power for the higher California prices.  

With the data ready at hand from US Energy Information Agency files from their website, it was a simple matter to sort the data for each state by annual average residential price in cents/kWh.   Being previously aware that low residential prices tend to correspond to high consumption, and vice-versa, inspection of the data for 2014 confirmed that relationship.  However, when the data is grouped into quintiles, a convenient grouping as there are 50 US states with ten members in each quintile, an almost perfect straight line resulted, as shown in Figure 1 above.   However, there are only four data points in Figure 1.   

The R-squared of 0.9997 resulted when only the four quintiles with highest prices are graphed, that is, the quintile with lowest prices was excluded.  Also, Hawaii is excluded as a high-priced outlier.   More on that in a moment.  

The data for each quintile is shown in table form below. 

Quint  kWh/y      Cents/kWh
1 13,528       9.67 
2 12,178     10.78 
3 11,445        11.89 
4 10,550     13.15 
5 7,311     17.58 

Next is shown in Figure 2 the graph of all five quintiles for 49 states - Hawaii is excluded as being a-typical and an outlier.   This graph has only a slightly lower correlation coefficient, R-squared of 0.9931.   

Figure 2.   Showing 49 states (excludes Hawaii)
The conclusion that can be drawn is that there is indeed a correlation, and a very good correlation, between average price for residential electricity and the quantity of electricity consumed on an annual basis by each utility customer.    California is in the fifth quintile for high price but low consumption (16.2 cents/kWh and 6,741 kWh/yr/customer).  Other states with California in the fifth quintile are almost all in the North East sector, Massachusetts, Vermont, Rhode Island, New York, Maine, New Jersey, and Connecticut.  Example states at the other extreme, in the first quintile are Louisiana, Arkansas, and Oklahoma - all hot, humid, and consuming 14,000 kWh/yr/customer on average, more than double that of California. 

In fairness, it should be noted that the high correlation coefficient only results when the quintiles are graphed.  For all 49 states individually, again excluding Hawaii as an outlier, a much lower correlation coefficient results, of R-squared 0.546.

UPDATE - 7/7/2016:  The graph shown below as Figure 3 is a repeat of Figure 2 above, with the highest (in red) and lowest (in green) states shown, as their average price's deviation from the national trend line.   California, the green circle at top left, is 2 cents below the trend.  Other states substantially below the trend include Maine, Colorado, Illinois, Utah and Montana. Those states with the highest deviation above the trend are Alabama, South Carolina, Tennessee, Mississippi, Connecticut, Louisiana, Maryland, and Texas.  -- end update
Figure 3 - Showing individual states
with greatest deviation from trend
as colored circles

Roger E. Sowell, Esq.
Marina del Rey, California
copyright (c) 2016 by Roger Sowell - all rights reserved

Saturday, July 2, 2016

Why California Electricity Costs More than US Average

Subtitle:  Mild Climate and Large Population Contribute to Prices

One of the more amusing aspects of writing a blog and commenting on other blogs is the almost unending stream of false information and wrong beliefs one encounters.   As former President Reagan said, "It's not that our . . . friends don't know anything, it's that so much of what they know just isn't so."  In this case, these people get to vote, and make their opinions known to elected officials, so it is somewhat important that what "just isn't so" gets pointed out.  Hence, this post on the disparity between US average electricity prices and the higher prices in California.   The facts show that California residential electricity use is below the national average, and the price per kWh consumed is slightly above average.  The reason for the higher price is low electricity consumption in a mild climate, by a very large number of customers, approximately 15 million customers. 

The common wisdom (that "just isn't so") is that California electricity prices are 1) higher than the rest of the country, 2) higher than they should be, and 3) higher because of stupid California policies to build renewable energy plants such as solar and wind.   Each of those three things are addressed in turn below. 

Higher Than Rest of US

Figure 1
California residential electricity is approximately 25 percent higher than average, but not the highest in the country.  Data from EIA for 2014 shows that California is 9th highest, that is, 8 states have higher residential electricity prices.  

In tabular form, the states with highest residential rates and their 2014 prices in cents/kWh were:

CA 16.25 
RI 17.17 
MA 17.39 
VT 17.47 
NH 17.53 
AK 19.14 
CT 19.75 
NY 20.07 

HI 37.04

Those are Rhode Island, Massachusetts, Vermont, New Hampshire, Alaska, Connecticut, New York, and Hawaii.   The same data is shown in Figure 2, below, as a bar chart. 

Figure 2
What is also true of California electricity prices is that they have been a bit higher than the US average for many years.   Even in the late 1970s and early 1980s, it was common knowledge in the chemicals and petroleum industries that electricity prices in California were higher than in most other states.   

Therefore, it can be seen from the above that California residential electricity prices are a bit higher than the US average, but by no means are the highest in the US 50 states. 

Higher Than Should Be

California residential electricity prices are where they are, and where they should be, due to a number of factors.   The most important factor is the state has a large population, 38 million people with 15 million residential customers as of 2014, but has very low electricity consumption per customer.  The low consumption per customer is due to the mild climate with low humidity.  Or, as the EIA states, "In most of the more densely populated areas of the state, the climate is dry and relatively mild. More than two-fifths of state households report that they do not have or do not use air conditioning, and almost one-seventh do not have or do not use space heating. Residential energy use per person in California is lower than in every other state except Hawaii."    Things have changed, but only slightly, since EIA wrote that, as Maine has barely edged out California for second place in residential electricity use per customer.  

The second important factor, after the mild, dry climate, is the large infrastructure for transmission and distribution that must be built over mountainous areas within the state.  In contrast to the nearest state in size and population, Texas, California has many more mountainous areas where transmission and distribution costs are much greater.  

Combined, a low per-customer electricity use and large, costly network or grid requires that each kWh sold command a higher price to pay for the grid's assets.  The utilities are allowed a 10 percent return on capital employed, so smaller volume of electricity sold must command a higher price.  

Finally, the 16 cents/kWh and 562 kWh/month, on average, yields a lower electric bill for the average customer compared to the US average.   The average bill for a California customer is only $91 per month, compared to the average for the US at $114 per month. 

The data for all states and DC are shown below, in kWh/month:  (Note, US average is 911.3 kWh/month)

Figure 3
  HI 506.4 
 ME 549.4 
 CA 561.8 <====
 VT 568.5 
 RI   583.0     
 NY 591.0 
 AK 605.1 
 MA 614.9 
 NH 619.4 
 NM 633.4 
 MI 653.6 
 NJ   669.7 
 CO 687.4 
 WI   694.4 
 DC 721.5 
 CT 729.7 
 IL    745.2 
 UT 746.7 
 MN 809.6 
 MT 853.8 
 PA    853.9 
 WY 863.2 
 IA   891.4 
 NV 894.2 
 OH 901.3 
 US 911.3 
 KS 928.0 
 OR 929.5 
 DE 949.8 
 ID    982.1 
 WA 1,005.5 
 IN 1,008.6 
 AZ 1,012.7 
 NE 1,022.4 
 MD 1,024.9 
 SD   1,045.6 
 FL   1,092.3 
 MO 1,094.8 
 NC 1,135.7 
 OK 1,137.7 
 AR 1,142.6 
 GA 1,151.5 
 WV 1,158.0 
 TX 1,158.1 
 VA 1,171.5 
 KY 1,177.3 
 SC 1,186.6 
 ND 1,239.6 
 MS 1,247.9 
 AL   1,264.7 
 TN 1,285.8 
 LA 1,291.4 

Higher Due to Renewable Energy Policies

This third "just isn't so" reason is easy to debunk after showing in point 2, above, that California residential electricity prices are not higher than they should be, nor higher than the US average.  As shown above, both the average monthly bill, and the consumption in kWh/month are less than the US average.  In fact, the average consumption per customer is third lowest out of 50 states plus the District of Columbia, DC. 

Yet, the impact of renewable energy policies in California may have some small impact on electricity prices.  Solar power, and wind power are addressed separately. 

Solar Power

Solar power, as shown earlier on SLB, had almost zero impact in California as little as 5 years ago.  Only in the past 5 years, since 2011, has solar power been added at the grid scale.  At present, there is almost 8,000 MW of solar power installed, almost all of which is PV.  The remainder is solar thermal.   The contribution of solar power is small, at approximately 6 to 7 percent of annual power sales.  It is clear, therefore, that the impact of solar power could not be a factor before 2011, yet California prices (see Figure 1) were 25 to 30 percent higher than the national average since 1990. 

Wind Power

The contribution of wind power in California has increased from 1.5 percent in 2001 to approximately 6 percent in 2014 of all electricity generated in-state, per the California Energy Commission data.   The fact is that wind resources in the state are few in number and below average in output, as measured by percent of installed capacity.  California wind turbines produce approximately 22 to 26 percent of installed capacity, compared to the Great Plains states of 45 to 42 percent of installed capacity.  Essentially, the wind blows stronger and more steady in the Great Plains states.    

It can be seen, then, that wind power contributes only a small fraction of total electricity in the state, and the electricity prices are higher due to low average consumption and a large asset base.  There can be no validity to the argument that policies on wind energy cause California electricity prices to be higher than the US average. 

Roger E. Sowell, Esq.
Marina del Rey, California

copyright (c) 2016 by Roger Sowell - all rights reserved