Conserving electricity makes sense

September 2007

A friend asked me recently if I thought there was a significant movement in the area of energy conservation with respect to electricity. My non-scientific answer was that on average I didn’t think there was much being done by the consumer, at least in this part of the country. If I am at all right in this assumption, there are a couple of reasons this may be true.

First, the average cost of electricity for a residential consumer in North Dakota is cheap compared to the rest of the country. In 2006, North Dakotans paid on average 6.5¢ per kilowatt-hour compared to 17.6¢ in Massachusetts, 16.3¢ in New York, and 13.5¢ in California. Even our close neighbors in Minnesota paid on average 8.14¢ per kilowatt-hour in 2006 – 25% more than in North Dakota. When electricity is this cheap, consumers don’t have the will to be bothered by something as boring as energy conservation.

A second reason little is being done in North Dakota to conserve electricity may be that there hasn’t been a recent rise in electric rates like other forms of energy. Compared to gasoline, fuel oil, propane, and natural gas, electricity prices have been incredibly stable.

Considering the low cost of electricity in North Dakota, we may even ask the question, “Does it make any sense for us to get excited about conserving electricity?” The answer is, yes, it probably does make sense. Even though the economic benefits are not as great here as in other parts of the country, we are probably making a mistake by not being more aggressive as consumers to conserve electricity. The stable, low electric rates we enjoy will not be here forever.

Based on growth patterns across the country, every utility will need considerably more generation to meet our increasing future demand. Most of our existing generation is more than 25 years old. The new generation will be much more costly and will certainly drive up the cost of electricity for all consumers.

From an economic standpoint, consumers who take action now rather than later will get a jumpstart on saving money. This will give them an early payback on whatever investment they have made. They will also be part of a movement, which will help to reduce the amount of new generation needed in the future.

There are, of course, many ways to conserve energy, and information is readily available on the Internet. Maybe the simplest and most effective action for a homeowner is to replace existing incandescent light bulbs with compact fluorescent light bulbs (CFL). The CFL bulb uses roughly 25% as much electricity as a comparable incandescent light bulb. CFL light bulbs have now gotten so reasonably priced that the homeowner actually saves on the cost of the bulb, as well as the energy savings. A CFL bulb may cost five times that of an incandescent light bulb, but it will last ten times as long.

We are fortunate we don’t have the economic stimulus for conservation that exists in many states with extremely high electric rates. This shouldn’t be a reason to be complacent. We will still do ourselves a favor if we start now to conserve our use of electricity, as well as any other form of energy.