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Report Blames Renewable Energy For Higher Costs, Proponents Say It’s ‘Misleading’

by | Jan 15, 2015 11:30am () Comments | Commenting has expired | Share
Posted to: Energy, Environment

Shutter Stock photo A state mandate requiring electricity providers to get a certain percentage of their power from renewable energy sources is forcing consumers to pay rising electric rates and will cause other problems down the road, according to a report out this week.

The report, from The Yankee Institute for Public Policy, advocates for the repeal of Connecticut’s Renewable Portfolio Standard, or RPS, saying eliminating it is “the first step in reasserting control over our electricity market and reducing prices.”

Proponents of renewable energy say the report is “misleading” because it didn’t consider the benefits of renewable energy, such as diversifying supply, hedging against price volatility, and environmental and public health gains.

First enacted by lawmakers in 1998, and updated several times since, the RPS phases in a requirement that electricity providers obtain a growing share of power from renewable sources such as solar, wind, fuel cells and hydropower rather than traditional sources like coal and gas.

In 2005, providers had to get 4.5 percent of their power from such sources; by 2020 they must secure 20 percent of their power from renewable means.

The Yankee Institute, a conservative think tank based in Hartford, says the mandates will cost the state more than $1.5 billion between 2004 and 2010, cost each consumer in the state $453 out of pocket ($1,812 for a family of four), cost the state 2,660 jobs and result in a $283 million loss in real disposable income.

“The RPS mandates force electricity providers to buy more expensive energy, because they cannot look for the least expensive option but instead must buy energy from a narrow list of approved sources,” the report says.

“By mandating that electricity be produced by more expensive sources, ratepayers in the state will experience higher electricity prices. This means that every business and manufacturer in the state will have higher costs, leading to less investment in both capital and labor,” the report says. “Moreover, every household will have less money to spend on other necessities and desires, from groceries to entertainment.”

Among various RPS-related expenses, the report says wind and solar sources typically are farther away from population centers than traditional power sources. That means, the report says, “we will likely have to add an additional 4,300 miles of new transmission lines to move energy to our market,” costing billions of dollars.

Repealing RPS is necessary to make the state more competitive and attractive to business, says the report, which was written by scholars at the Beacon Hill Institute at Boston’s Suffolk University.

Rep. Lonnie Reed, D-Branford, who is House chair of the legislature’s Energy and Technology Committee, criticized the report, calling it “part of a national push to sabotage and annihilate the growing consumer demand for renewable energy alternatives.”

“Our RPS goals have been instrumental in fast-tracking more affordable renewable opportunities,” she said. “We have implemented successful policies that encourage the renewable industry to lower their prices and become competitive. Renewable prices have dropped dramatically.”

She added, “We still have certain elements pursuing amped-up efforts to kill off the renewable competition. Not very subtle and not going to happen.”

While proponents have claimed that RPS will create “green” sector jobs in the state, the Yankee Institute report says that is unlikely. Only about 4 percent of the renewable energy used to meet the mandates has been generated in Connecticut, the report says, with the rest originating elsewhere.

Dennis Schain, spokesman for the state Department of Energy and Environmental Protection, said the report is “misleading.”

The RPS requirements have benefits, he said, such as diversifying supply, hedging against price volatility, and environmental and public health gains, none of which the report takes into account.

“In addition, it does not appear that the study considered the fact that Connecticut developed a competitive procurement process to purchase the clean energy needed to meet RPS requirements – as opposed to the conventional approach of purchasing Renewable Energy Credits,” he said. “The innovative approach we adopted is estimated to save ratepayers more than $235 million over the next two decades.”

Most states nationwide have RPS, according to the U.S. Energy Information Administration. Many other states allow renewable energy credits, meaning they allow producers who generate more renewable power than they need to meet their own RPS obligations to trade or sell credits to other suppliers that may not have enough RPS-eligible electricity to meet their requirement, according to the administration.

The Yankee Institute maintains the mandates will cost Connecticut ratepayers in the long run, especially since the state doesn’t have the transmission infrastructure needed to meet the RPS demands.

“The high cost associated with infrastructure, which must be borne by ratepayers, ultimately diminishes the promise of renewable energy over time.”

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(3) Archived Comments

posted by: ocoandasoc | January 15, 2015  4:44pm

Both sides of this argument are accurate.  CT’s RPS mandates will cost all Connecticut energy users a ton of money going forward. If it’s not modified or repealed, the numbers by 2020 will be staggering, especially since CT already has nearly the highest energy costs in the nation due to environmental factors and the State legislature’s dismal record of energy policy decisions over the last four decades.
Despite wishful thinking to the contrary, solar and wind energy are not presently cost effective in the State of Connecticut for consumer use and, barring dramatic and unlikely breakthroughs, will not become so anytime in the near future.  (Anyone who tells you different either doesn’t know what they’re talking about or is trying to sell you something – or both!)
On the other hand, if you are a believer in global warming, and you think these relatively small steps that the RPS requires will help, then you should be happy, or at least resigned, to paying the premium and cutting your energy use to match. Also, it is possible (though not a sure thing) that mandating renewable energy sources combined with government-assisted investment will help renewable energy sources become more cost-efficient in the future.
The debate will be exacerbated if the cost of oil and natural gas remain low. Because this makes wind and solar even dramatically LESS cost-effective. Most people are conscious of the environment, but even more conscious of their pocket books!
Let’s be honest. Some of the “steam” is gone from the global warming arguments. Panicky projections from a decade or two ago have proved to be inaccurate. An honest assessment of the increasing pollution caused by China, Russia, and third world countries causes reflection on whether U.S. policy and sacrifice is worth the effort. And “climate change deniers” are no longer subject to the same level of vilification as the nut cases who deny the holocaust. With the Republicans and Southern Democrats in control of both houses of Congress I don’t think we can expect the legislative and regulatory energy policies to beome more environment-friendly. And on the regional level, it might be hard for progressive states like Connecticut to maintain tough environmental policies when the states they are competing with for economic growth and cost of living are lowering or eliminating theirs.
The old saying “you pay your money and you take your choices” should be reversed when it comes to energy policy where “you make your choices and then you pay your money for them.”

posted by: Biff Winnetka | January 15, 2015  11:06pm

If solar was cost effective in northern climes like CT (its not, without large taxpayer subsidies- even at $100 oil) then you would expect to see residential solar installations littering the homes in the southern states.  And that is just not the case.  If solar is not cost effective in Arizona and Florida it sure aint gonna be cost effective in CT.

posted by: Diogenese | January 17, 2015  9:13am

Heh… I guess making prices artificially high and forcing them steadily upward counts as “hedging against price volatility”. But did the legislature really mean that we should count burning wood in Maine as a ‘renewable energy source’ that’s green? But burning ‘biomass’ produces pollution, including CO and CO2… There is no escaping the law of unintended consequences.

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