How much power does your home use when you aren't there? If you have high-tech gear like a cable box, router, and wifi, the answer is a lot more than you think. Utilities like American Electric Power (NYSE:AEP) and Duke Energy (NYSE:DUK) could more easily meet the new green utility regulations if the tech industry took the environment more seriously.
While you're away...
According to the Natural Resource Defense Council (NRDC), this country's always-on Internet gear (routers and wifis) use, "three dirty coal power plants' worth of electricity" in a year. The unfortunate thing is that these two devices practically sip electricity compared to your cable box, which, according to the LA Times can eat as much as $8 worth of electricity every month. A router and wifi consume around $0.50 a month.
Now how badly do you want to cut the cable cord? But it doesn't have to be this way. In fact, the cable industry is instituting its own standards that will cut the energy drain between 10% and 45%. But industry watchers say that's a modest goal at best, with the NRDC citing government regulations that led to a 75% decrease in the energy drawn by such always-on necessities as refrigerators.
Do we really need Uncle Sam to tell the tech industry to man up on the energy front? After all, tech firms like to consider themselves green champions—but some of their most prolific and essential devices don't appear to live up to that standard.
Lend a buddy a hand, will ya?
When no one cared that much about energy consumption and carbon dioxide, such electricity vampires weren't a big deal. But now that global warming is on the front pages, electric utilities are in the cross-hairs. The big hit has been the proposed 30% reduction in carbon dioxide that the Environmental Protection Agency (EPA) just unveiled.
Companies like American Electric Power have been waiting for this news and have already started to adjust. For example, between 2005 and 2010, this utility giant increased its natural gas capacity by roughly a third while coal remained static. With a solid gas backstop, American Electric Power has started to shutter coal capacity. Between 2010 and 2016 coal capacity is set to fall by about 30% as natural gas continues to increase.
This effort should reduce American Electric Power's carbon dioxide emissions by around 25% by 2016 using the EPA's regulated 2005 reference date as the start point. Despite these changes, however, coal made up 75% of American Electric Power's generation last year. Since the EPA's regulations allow for supply side and demand side changes to count toward that 30% CO2 mandate, the tech industry could easily lend a hand by making gear that sips the juice instead of gorging on it.
Duke Energy is in a similar boat. In fact before the new EPA carbon regs were outlined, Duke Energy expected to spend between $5 billion and $6 billion on regulatory compliance through 2023. A quarter of that was earmarked for air related issues. That's just a little bit more than chump change.
In fact, even before the EPA rules, Duke Energy was considering shutting up to 7% of its coal fleet. That would follow along with American Electric Power's coal retirements. And now that the proposed carbon rule is out, those retirements are likely a done deal. But that comes at what Duke Energy calls the risk of, "long-term fuel diversity."
In other words, if everyone shifts to cleaner-burning natural gas, gas price volatility will become increasingly problematic. How big an issue is this? In 2012, gas prices were as low as $2, and now they are in the $4.50 to $5 range. That's why Duke Energy recently built a high-tech coal plant—it doesn't want regulations to force it into a fuel corner.
We're all in this together
While Duke Energy and American Electric Power are in the regulatory cross-hairs today, the tech industry could lend a bigger helping hand if it wanted. Even though Duke and American Electric Power are well on their way to compliance with new EPA goals, energy sipping devices would go a long way to helping ensure the future of the electricity we need to power the gear the technology sector peddles.
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Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.