Estimating the Effect of Electric Generation Technology Mix on Retail Electric Rates

Much public attention has been focused on the energy industries in recent years, particularly the electric generation and petroleum industries. This attention is connected to concerns of global warming and the exhaustion of finite natural resources, with the related question of how to optimally meet our nation’s energy needs. One particular point that has received significant attention is the in the mix of resources and technologies used to generate electricity. Although the electric market is very complex and electricity pricing is a complicated process, this study seeks to illustrate a rudimentary relationship between electric rates and generation technology mix. This study does not purport to be a complete review of the electric market; rather it is intended to provide a starting point to anticipate to what degree changing a state’s electric generation asset portfolio will affect retail electric rates. For individuals and groups interested in promoting a change in any state’s generation profile, it is important to be able to estimate the expected increase or decrease in electric rates and the associated economic ramifications.