Today I am looking at Americans and their very strange math abilities. While watching a campaign commercial for Obama, I realized why “capacity factor” in wind is regarded as the reality of power produced, even thought actual electrical generation falls far below that. When Americans speak of taxes, there is a tendency to speak of the top marginal rates. This can be 15% or 28% for most people. However, this is not the actual rate a person pays in. In most cases, the rate is much, much lower. The average effective tax rate is reported to be 11%, and for those earning less than $100,000 is more like 8%. One year, our actual tax rate was closer to 2%. Yet Obama continues to rant about Mitt Romney’s 14% tax rate as if middle class earners were paying a higher percent in taxes. The truth is, most are not paying over 14% as the ad suggests. (I will note that I have no deductions other than standard ones. There was a 401k contribution when the tax rate was 2%.)
When people see capacity factor for wind or number of homes served, they have the same blindness as when looking at the tax rates. It’s easier for the brain to just accept a number and not question. However, in the case of wind energy, as electric bills climb and “homes served” turns out to be “homes served at 3 am when the wind was actually blowing”, there will be consequences to this mindless acceptance.
Somehow, people need to realize that all is not as that 30 second sound byte says and if you never look beyond the simplistic numbers feed to you by the news media, there may be outcomes you failed to even consider. Head in the sand is not a good thing. It leaves another part of your anatomy exposed…..
When looking at 3% per year rate increases often found in 20 year wind power contracts, 3% may not seem like much. However, let’s look at a customer paying $100/mo for electricity. In my state, you can opt to pay at a higher rate to help cover wind. For purposes of this example, we are going to go with the customer paying only at the actual wind power rate (100% of his bill is at the wind cost).
|Year||Cost per month||Increase per yr||Year||Cost||Increase per yr|
While each individual increase seems small, as the years go by, the increase becomes larger and larger. For individuals living on fixed incomes, this can be significant. Also, since it is a 20 year contract, there is no chance of the cost going down. With traditional power sources, as fuel becomes cheaper, the cost of electricity can be held down. However, the 20 year contract precludes such a decrease.
It is not clear if wind producers are paid for X amount of electricity per year whether they deliver it or not, but some locations are paying turbine owners even when the turbines are shut down due to cheaper hydro power because it’s “not fair” to the wind producers. No mention of fairness to customers.