A Regional Power Authority for the Midwest? The Renewable Energy Borrowing Authority Proposal
September 24, 2009
Ohio’s cost of electricity, pegged at 8.96 cents per kilowatt hour in the latest release from the Energy Information Administration, is 10 percent lower than the national average of 9.86 percent. However, most of our electricity is generated with one of the cheapest fuels – coal – and in the 21st Century we can expect to see changes. Coal itself will increase in cost as new technologies to scrub and sequester its high carbon content are mandated to curb global warming. To maintain competitiveness during transition, Congresswoman Marcy Kaptur of Ohio’s Ninth District (Toledo) proposed in the “American Clean Energy and Security Act of 2009 (Title I: Clean Energy) a ‘Renewable Energy Borrowing Authority’ for Midwestern and Northeastern states, capitalized at $3.5 Billion, to help plan for and finance new energy assets for the state. Policy Matters Ohio took a closer look at the regional power authorities to better understand the proposal.
We found that within a diverse federal system of utilities, ‘Federal Power Marketing Administrations’ (FPMAs), set up originally to sell power from federal dams, oversee service territories that cover three quarters of the nation; that the (weighted) average cost of electricity in cents per kilowatt hour is 26% higher in states outside these service territories, and that Ohio and the rest of the Midwest and Northeast are on the outside. While Ohio’s rates are currently competitive, having a FPMA service territory and financing could be an economic development asset in the transition to a clean energy economy.
Read about the proposal, the history of FPMAs and comparison of rates here: