Energy Source with Sharon Epperson

Consumers: Will They Really Pay More To Save The Environment?

Good news for utilities! Or, make that small comfort. Consumers are willing to voluntarily pay a bit more for electricity, if the extra money goes to help mitigate greenhouse gases, according to a consumer survey done by Deloitte.

An overwhelming majority--82 percentage--said it is important to impose controls on greenhouse gas emission, while 62 percent said they’d even pay a bit more for it.

But just how much more, is a bit less encouraging. As the percentage rise increases, those willing to pay more declines. Fifty-five percent said they would support a 10 percent price increase. But only 38 percent surveyed say they would pay more when the rise it to 15 percent and only five percent would willingly pay more than a 15 percent increase. A full 34 percent said they were opposed to any increase at all.

Still, Deloitte considered its survey findings, which were released at the recent Deloitte Energy Conference, as positive. “I think it should give regulators some comfort that a large significant percentage of the public that understands the underlying reasons for costs to go up and rates to go up – it’s a positive sign,” says Branko Terzic, Deloitte’s Energy & Resources regulatory policy leader, who has served as a regulator (at both state and federal levels) and utility executive.

But it is unclear how this elasticity will hold up, on top of prices increases that are happening for other reasons. Consumer utility bills seem bound to rise while electricity production costs are rising.

The reasons for the rise, according to state public utility regulators, are: fuel prices increases, according to 35 percent surveyed, while 23 percent say it's because of environmental compliance and 21 percent say it's because of increased capital costs. Some 11 percent say it's due to inflation. (Fifty “top” state regulators were interviewed by telephone, along with 1,000 adults in a national survey.)

Another interesting finding concerns nuclear power and so-called clean coal technology. State regulators favored, by 72 percent, nuclear power as their preferred energy technology. The public is less sure this is the right way to go, even if nukes do not emission any greenhouse gases, with just 53 percent registering their support.

But that is changing and fairly quickly it seems. Two years before just 49 percent of the public supported new nukes. In that same time, those opposed declined from 46 percent to 36 percent, and the ‘Don’t Know’ category rose from five percent to 11 percent.

When it comes to clean coal technology 68 percent of the public supports this option; 55 percent are willing to pay 5 percent more to support it. But regulators are less enamored of this option with 53 percent expressing support.

Terzic says this reflects that regulators are more knowledgeable about the challenges with ‘clean coal’ technology, which involves capturing carbon dioxide and then pumping it underground. One problem is that there is no off-the-shelf technology that utilities can avail themselves and none is expected until at least 2020.

Terzic said regulators often face difficult choices in trying to provide for future energy needs that may not always enjoy public support at the time. “Regulators should do what’s good public policy in the long-run even if it is unpopular with the public,” he says.

Questions?  Comments?