Archive for March 2016
So we’ve been talking about the all-electric house. Why, if I say it’s so great, aren’t all houses all-electric?
Not the cost of the house. The cost of the electricity to RUN the house. Most of the time when you hear anyone talk about conserving energy, they usually say something “make sure you turn off lights when you leave a room”. Although plugs and switches certainly use power, especially if you have a bunch of TV’s and computers, about 75-80% of the electricity necessary to run an all-electric house is used to run the water heater, furnace, dryer, and range. I’m not sure when someone figured it out, but at some point someone concluded that natural gas is a cheaper alternative to electricity and if you could run the water heater, furnace, dryer and range on natural gas and everything else on electricity, monthly energy costs would be smaller. For decades, this has been the standard new home make-up; plugs and switches use electricity and water heaters, furnaces, dryers and ranges use natural gas.
When the switch to natural gas for most of the energy a house needed first took place, I think it was in the late 50’s early 60’s, obviously the per home electricity demand plummeted. The benchmark for typical electricity use per home was lowered considerably. However, power companies are monopolies. There is no competition. If they choose to raise electricity prices, they can, with basically no competitive consequences. We all have no choice but to pay whatever price the power company decides we need to pay. What that means is that over time there is a steady increase in electricity costs and, I believe that if left unchecked, the original savings that occurred when homes switched to natural gas, would be wiped out by the unending ability of power companies to raise prices. That’s kind of a long winded way of saying that originally there was a huge savings to the consumer in monthly energy costs AND a huge reduction in electricity demand, but over time the energy monopoly wiped out the savings by continually raising prices so that, on an inflation adjusted basis, the savings per home by using less energy disappeared.
However the electricity demand reduction remains. We are still using a LOT less electricity per home than if we had no natural gas. We’re just not getting the “relative” cost savings anymore. There is no question that if we went back to electric water heaters, electric furnaces, electric dryers and electric ranges our monthly electricity costs would SKYROCKET. It’s like the worst case imaginable. We no longer receive the cost savings of lessened electricity demand created by adding natural gas to our homes, yet we can’t go back to all-electric or our monthly energy costs would be outrageous. Plus if the energy monopolies continue to increase what they charge us, which is a given, at some point we’ll actually be paying MORE than when the big switch to gas occurred. What a stupid scenario of capitalism backfiring. Any Economics professor will tell you that monopolies are bad. Here’s a great example of why.
But if City Ventures is championing the all-electric home, doesn’t that mean that City Ventures homeowners are paying way too much for their monthly electricity ??
Nope. In fact most of them are paying almost nothing.
How is that possible??
I’ll tell you next month