Should good intentions or correct facts determine energy policy? That’s the question up for debate with North Carolina’s Renewable Portfolio Standard. The standard requires Tar Heel State utility companies to buy 3 percent of their energy from renewable sources like wind and solar, with the requirement rising to 12.5 percent by 2021. This mandate may be well-intentioned, but it means that North Carolina families and businesses face higher energy costs, and it should be repealed.
One key proponent of the Renewable Portfolio Standard is the American Wind Energy Association, a trade association representing and lobbying for the wind energy industry. Not surprisingly, AWEA strongly supports energy mandates and tax incentives that prop up renewable energy at the expense of American taxpayers and energy consumers.
North Carolina lawmakers would be wise to look past the wishful thinking from special interests like AWEA. They should look at the harmful effect that this energy mandate has on our economy.
Thirty-seven states and D.C. have energy mandates or goals of some kind. Colorado’s RPS law mandates 30 percent renewable energy by 2020; New York nearly the same level by the end of this year. California demands that 25 percent of its electricity come from renewables by 2016, rising to 33 percent by 2020.
Energy sources like wind and solar are more expensive than natural gas and coal, so mandating that N.C. utilities supplement with these types of energy means that people and businesses living in North Carolina will face higher electricity bills.
The cost differences are significant. Natural gas costs $66 per megawatt hour. (The average American household uses just under 11 megawatt hours a year). Coal-generated electricity costs $97, but that number has risen, thanks to the Obama administration’s regulatory assault on the industry.
These numbers are small compared with the costs of renewable energy. The Department of Energy estimates that new photovoltaic solar power costs $152 per megawatt hour, while new thermal solar costs $242. Heavily subsidized newly constructed wind power appears to cost $96 – although independent analyses conclude that the real cost is closer to $150. Either price is still considerably more expensive than the cheap natural gas that’s fueling America’s energy boom.
Given all the economic downsides of these energy mandates, it’s not surprising that other states are considering repealing theirs. The Kansas state legislature is currently considering a full repeal bill. It overwhelmingly passed the state Senate, and the state House will reconsider it during its wrap-up session later this month.
RPS mandates force utilities to buy this more expensive electricity, regardless of whether energy consumers demand it.
As a result, energy consumers get stuck with higher bills. Data from the DOE show that most of these states are dealing with electricity price increases much higher than the national average. In Colorado, electricity costs have risen by 14 percent since 2008. They’re up 22 percent in Minnesota and 30 percent in Kansas. Here in North Carolina, electricity costs have risen by over 13 percent. These numbers will certainly go up as each state approaches or increases its RPS goals.
Not only will North Carolina families face higher energy bills, our businesses will, too. Higher energy bills could prevent many businesses from expanding and creating jobs – another negative consequence of the RPS on North Carolina.
Renewable Portfolio Standards are little more than government-granted privileges for renewable energy corporations that saddle job creators and families with higher electricity costs. North Carolina state lawmakers should put hardworking families and small businesses first and get rid of this misguided, onerous energy mandate.
John Dudley is the North Carolina director of Americans for Prosperity.