Published on December 20th, 2011 | by Stephen Lacey4
Renewable Energy Standard Lies — The Next Big Thing?
This post was originally published on Climate Progress and has been reposted with permission.
by Stephen Lacey and Richard Caperton
The truth can be very inconvenient. With real-world experience and numerous non-partisan research organizations showing over and over again that state-level renewable energy targets have not substantially driven up electricity rates, clean energy opponents are simply creating their own numbers.
The latest gusher of lies comes from Americans for Tax Reform’s Grover Norquist, who just ran an op-ed in Politico co-authored with his colleague Patrick Gleason. The piece is laughable — until you realize how much power Norquist has over ideologues determined to stop any effort to promote renewable energy or address climate change.
Let’s start with their first assertion:
Renewable energy standards, by design, are intended to drive up energy costs — requiring utilities to use more expensive and often less reliable sources of energy. Not surprisingly, such laws have hit ratepayers hard. States that have a binding RES now have electricity costs that are 39 percent higher than states that don’t have a binding RES.
That’s a scary number. But it’s also totally meaningless. The problem is that these states had higher rates before they ever put the RES in place.
There are two pieces to answering this false assertion. First, renewable energy opponents like to pretend that the only thing that influences electric rates is the cost of energy. But this is only a small part of the whole picture.
In fact, things like customer density, average monthly usage by each customer, and the age of a utility’s distribution grid all play a huge part in determining electric rates. In 1995, researchers from MIT and the Analysis Group identified 14 reasons why a California utility’s rates would vary from the national average. The picture since then has only gotten more complicated, with massive restructuring of the electric utility industry, including “deregulation.”
The more important metric is how much electric rates have changed in states with standards versus states without. Norquist and Gleason would like you to believe that states with clear standards see rapidly increasing electric rates, but it’s simply not true. In fact, the data shows that the presence of a state-level renewable energy standard has a virtually zero statistically-significant impact on how much electric rates changed from 2000 to 2010:
Although states with RES’s had a little more variability in how much their rates changed, there’s no clear evidence that the mere presence of an RES led to a bigger rate increase. From a statistics perspective, we can be 95% confident that the average impact of a state RES on electric rate changes is somewhere between 1.1 percent less and 9.7 percent more than in states without an RES.
And, it’s worth looking at some specific examples. For example, Hawaii had the biggest change in electric rates, but this was mostly due to the fact that much of their power generation is fueled with oil, so their fossil fuel imports are responsible for rate increases. And, Maryland is the second biggest change, but this is probably because of the well-publicized rate increases associated with deregulation in that state.
This real-world experience isn’t going to sway the most determined anti-clean energy crusaders. Norquist and Gleason tout figures from the free-market, pro-deregulation Beacon Hill Institute, which published some pretty bold projections about future price increases:
Suffolk University’s Beacon Hill Institute has examined the effects of these mandates in individual states, and the results don’t get better. The RES in North Carolina, one of 2012’s key battleground states, is projected to reduce real disposable income by $56.8 million and likely be responsible for the loss of 3,592 jobs by 2021.
New Mexicans could pay an estimated $2.3 billion more for their power and lose more than 2,800 jobs by 2020, as a result of that state’s RES. Beacon Hill projected similarly bleak economic effects in various other states with an RES.
By contrast the well-respected, non-partisan Energy Information Administration recently modeled the impact of national Renewable Energy Standard and found that it would leave GDP growth virtually unchanged. Under an 80% clean energy standard by 2035, GDP would grow at 2.67% — just a .02 percent change from the baseline 2.69%
Meanwhile, the experiences from states around the country show exactly the opposite that what Norquist, Gleason and the Beacon Hill Institute claim:
- In the State of Michigan, for example, utility contracts for renewable electricity under their 2008 renewable energy standard have come in at prices below the cost of power generated from new coal plants, and consumers continue to pay below the national average for their electricity.
- A report from the Michigan government clearly states that there is “no indication” that their clean energy standards “have had any impact on electricity prices in Michigan.”
- A report done by Bernstein Research found that wind generation in Texas (complimented with an aggressive RES of 5880 MW of installed renewable capacity by 2015) actually lowered the cost of power for utilities by $2 and $4 per megawatt-hour in 2008.
- A study of the Xcel system, a utility in Colorado, found that the wind already on their system would save Colorado ratepayers over $251 million.
- A recent request for proposals by Southern California Edison (one of the largest investor-owned utilities in the country) found that solar power is already among the cheapest ways for them to generate new electricity.
Could we see some future price increases in certain areas of the country? Absolutely. But the wholesale assertion that these standards are driving up electricity rates and decreasing economic productivity is blatantly false.
Of course, these claims are being made by the same type of ideologues who said that the Regional Greenhouse Gas Initiative would drive up rates 90% — only to have an independent consultancy find that the cap and trade program saved ratepayers in the Northeast $1.1 billion and created $1.6 billion economic value.
Richard Caperton is director of clean energy investments for the Center for American Progress. Stephen Lacey is a writer with Climate Progress.