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Renewable-energy mandates have high cost

Motivated by a desire to reduce carbon emissions 29 states, Puerto Rico and the District of Columbia have required utility companies to deliver specified minimum amounts of electricity from “renewable sources.”

Proponents say the mandated restrictions will reduce harmful emissions and spur job growth, by stimulating investment in green technologies.

The patchwork of states rules — affecting the electricity bills of about two-thirds of the U.S. population as well as business and industrial users – has sprung up in recent years without the benefit of the states fully calculating the costs.

Growing evidence that the costs may be too high — that the price for purchasing renewable energy, and building transmissions lines to deliver it, may outweigh any environmental benefits and be detrimental to the economy, costing rather than adding jobs.

The higher cost of electricity is essentially a carbon-reduction tax that puts a strain on a struggling economy and is falling most heavily on the least well-off among residential users.

Increased regulation of coal-fired plants is another reason for rising electricity costs. This adds to the difficulty of isolating the cost of renewables.

Analysis of available data has revealed much higher rates in states with mandates compared to those without.

Seven coal-dependent states with mandates saw their rates soar by an average of 54.2 percent between 2001 and 2010, more than twice the average increase experienced by seven other coal-dependent states without mandates.

Another pattern emerging is the disconnect between the optimistic estimates by government policymakers of the impact of the mandates and the harsh reality of the soaring rates that typically result.

In some states implementation is proceeding so rapidly that users are being locked into exorbitant rates for many years to come. California and Oregon serve as case studies of how rates have spiraled.

Projects being built in California are so expensive that “people are going to get rate shock.”

Joe Como, acting director of the Division of Ratepayer Advocates, an independent consumer advocacy arm of the California Public Utility Commission, said the approval of overpriced renewable energy will harm “the states’ efforts to achieve greenhouse gas reduction.”

Given the mandates have not received enough study and that they appear to be posing risks to a fragile economy, state programs should be put on hold. Until a thorough cost-benefit analysis to determine responsible levels of renewable electricity, existing mandates should be suspended and new ones blocked.

All of the above excerpts are from an Energy Policy and the Environmental report titled The High Cost of Renewable-Electricity Mandates.

Robert Bryce, the author, is a senior fellow at the Manhattan Institutes’ Center for Energy Policy and the Environment. He has been writing about energy for a couple decades and has had articles published in the Wall Street Journal, the New York Times, the Atlantic Weekly and the Washington Post. His fourth book, Power Hungry: the Myth of “Green” Energy and the Real Fuels of the Future, was published in 2010.

This entire report can be accessed by Googleing “The High Cost of Renewable-Electricity Mandates.”

The mission of the Manhattan Institute is to develop and disseminate new ideas that foster greater economic choice and individual responsibility.

 

Joseph P. Smith is the president of Pyro-Chem Corporation in South Point.