The pricing of electricity is astonishingly complex.  Aspects of a free market are overlaid with state utility regulations and overlaid again with grid management and pricing policies.  Utilities have historically yielded moderate and very reliable returns on investment.  In the case of coal generation there is a significant market failure.   Billions of dollars a year in health effects and environmental degradation due to pollution are slid on to the public and are not counted in “the market price” of coal generated power.  Coal generated energy, priced without counting the costs unfairly transferred to the public, is viewed by the market as cheaper and so it is pursued as the “best choice for cheap reliable energy”.  Coal provides 50% of U.S. electricity but emits 80% of the CO2 from the electric sector.  If we are to do what the climate experts consider the minimum to avoid the most catastrophic consequences of Global Warming – reduce CO2 emissions 2% per year for the next 4 decades, massive and expensive changes will need to be made in the way we generate electricity.  We are at a societal crossroads.  We can make massive investments to test and prove carbon capture and sequestration (CCS) technology, in an effort to extend the useful life of a 19th century power technology and “bet on the come,” that if CCS is proven economically and technologically feasible over the next 10 – 20 years, we can use it to remove the CO2 from all the new plants we have already built and we are now dependent on.  Or, we can make the same massive investment in efficiency measures to buy a decade of not needing to significantly increase generation capacity and during that decade invest in growing already proven and currently competitive 21st century renewable generation technology in large enough amounts to meet the future need to replace aging generation assets.    The second choice will reduce rather than add to air pollution, its impact on the environment will be minimal compared to the first choice, it guarantees reductions in CO2 emissions rather than hoping for reductions based on unproven technologies,  it will have more economic benefits and create more jobs than the first choice, and it will cost consumers far less.  

• A study that reveals the market failure referred to above.  Coal is cheap only if you don’t look at total costs.  According to a report prepared by independent consultants for the Government of Ontario, the province’s coal plants kill 668 people per year in Ontario and cause 928 hospital admissions, 1,100 emergency room visits and 333,660 minor illnesses. According to the same report, when the health and environmental costs of burning coal are properly factored in, switching from coal to natural gas for electricity generation would reduce the province’s total cost of power generation by $1.7 billion per year. The net savings from replacing coal with en­ergy conservation and renewables would be even greater. As Figure 1 reveals, the total cost per kWh of coal-fired electricity generation is 67% greater than for natural gas-fired generation. Also note in the Coal column that counting health and environmental costs makes the real cost of coal four times higher.  So, for every dollar spent generating electricity from coal, the public is paying $3 for health and environmental harms.  The market failure is that the “market cost” of coal fired power is less than half the price of gas fired energy.  Tallying all the costs, including the costs to health and the environment that the market failed to count, coal fired power is roughly 50% more expensive than gas fired power.

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• Further information about the ability of Efficiency measures to meet ongoing demand increases is in the Efficiency section.
• ECONorthwest Efficiency study for Arkansas reviews costs of proposed plant including health and environmental costs, and concludes - This report demonstrates that the energy-efficiency/renewable-resources alternative is the better choice, for it would have fewer adverse environmental consequences, create more jobs, impose smaller costs on Arkansans, and be accompanied by lower economic risk. 
• Environmental Defense report on efficiency in Texas:  “Investing in energy efficiency measures offers Texas the best, fastest, cleanest and cheapest route to solving the state's short-term energy needs. Further, it illustrates how Texas can use such measures to reduce our long-term energy consumption and the proposed need for new power plants.”
•  This paper compares direct spending in Arizona, Colorado, and Michigan on the new construction and operation of three types of power plants: wind power, a natural gas combined-cycle baseload plant, and a coal-fired power plant. To reach a fair comparison, spending is calculated based on the same amount of energy generated by each plant.  Wind development has substantially higher economic benefit.