Efforts to repeal Renewable
Portfolio Standards (RPSs) are underway in several states. In Kansas, where
the legislature voted down two
separate RPS repeal measures in 2013, the addition of five Republicans to
the legislature has reinvigorated
the RPS repeal effort. The West
Virginia legislature is also considering a repeal of its RPS—even though
West Virginia’s law does not actually require renewable energy development,
instead allowing compliance through “alternative energy resources” including coal and natural gas. In Colorado,
two bills have been proposed to either reduce the required amount of renewable
energy development or to push back compliance deadlines. In North
Carolina, repealing the RPS is the first item on Americans for Prosperity’s
(a very conservative advocacy organization funded
by the Koch brothers) legislative agenda for 2015. And finally in Connecticut,
a report by the Yankee Institute, a conservative think tank, argues for repeal
of the state’s RPS.
The repeal efforts in various states are all based on a
common strain of misinformation. Calls for repeal frequently repeat the
assertion that RPSs cost states money and jobs. For example, the Yankee
Institute claims that Connecticut’s RPS adds roughly $1.6 billion to the
state’s electricity prices over the next five years, costing each resident
roughly $450. That same study also claims that the RPS will cost the state 2,660
jobs and $283 million in lost income during the same period. Opponents of
Kansas’s RPS play the same tune, claiming that the RPS will lead to increases
in electricity rates. The Colorado lawmaker leading the charge against that
state’s RPS, Republican Senator Ray Scott, makes essentially the same argument
that the policy has burdened consumers with higher energy bills.
However, the argument that Renewable Portfolio Standards
raise rates, as compared with the business-as-usual course of reliance on
fossil fuels, is simply—and demonstrably—wrong. For example, the U.S. Energy
Information Administration (EIA) reports that
the average residential electricity price increased by 3.2% between 2013 and
2014. More specifically, in the Southeast, where every state except South
Carolina lacks an RPS, average prices rose by 3.1% in the same period.
Meanwhile, an
empirical study by Lawrence Berkeley National Laboratory has revealed that
Renewable Portfolio Standards in deregulated states have increased electricity
rates by 2% or less (except in Massachusetts, which saw a roughly 2.5%
increase), while RPSs in regulated states have increased rates by roughly 3% or
less. In short, electricity rates have not increased more quickly in states
with Renewable Portfolio Standards.
In fact, reliance on fossil fuels seems to be the primary
driver for electricity rate increases. EIA reports that states in New England
that saw an
11.8% increase in electricity prices can attribute those rate increases not
to RPSs, but to volatility
in the price of natural gas as a result of high
energy demand in a cold winter. Similarly, as of 2012, Kansas’s RPS had
increased electricity rates by less
than 1%, but a single rate increase to pay for a single environmental
upgrade to a coal-fired power plant would have raised rates by 2.3%,
more than twice as much.
A similar pattern of debunking is easy to provide for the
claims that RPSs kill jobs. For example, the Montana Department of Commerce reported in 2013 that wind energy
development in that state had provided $1.5 billion in capital investment and
had yielded nearly 20,000 jobs—more than the Keystone XL pipeline. Similarly,
there are now twice
as many workers nationwide in the solar industry than in coal mines.
Oregon provides the clearest example of the disparity
between the claims about RPSs and the truth about RPSs. In 2011, the Beacon
Hill Institute & Cascade Policy Institute released a report entitled
“Economic Impact of Oregon’s Renewable Portfolio Standard.” That report
projected that Oregon’s RPS would cost the state $992 million in 2025, would
raise electricity rates by 24%, and would lead to the loss of 24,630 jobs. In
fact, none of these predictions have come to pass. In reality, Oregon added 3,067
renewable energy jobs in the second quarter of 2013. More dramatically, LBNL
reports that compliance with the RPS
has actually saved money: “In Oregon, average utility estimates of
incremental compliance costs were actually slightly negative (-$4/MWh); that
is, RPS resources were determined to cost less, on a statewide average basis,
than the proxy non-renewable resources that would have otherwise been procured.”
In short, Oregon’s RPS is actually saving the state money while creating jobs
and providing carbon-free energy.
RPS opponents seem to remain blinkered to the fact that
Renewable Portfolio Standards work, instead making demonstrably false claims
about these policies while refusing to inquire into their actual effects.
Republicans in the West Virginia legislature are epitomizing
this head-in-the-sand approach to policy-making, opposing economic analysis
of the proposed RPS repeal—despite the fact that a local utility believes it
could comply with the RPS without increased costs or job losses.
My personal favorite flavor of RPS-related misinformation
comes from Colorado.
In that state, average electricity rates are well below the
national average, but state Senator Ray Scott still claims the RPS is harming
ratepayers. Scott laments that the state’s RPS “is being paid for by the
ratepayers, not the utilities.” He continues: “And, quite frankly, if it’s such
a great idea, the companies should build these systems. It shouldn’t be done on
the backs of the ratepayers.” This claim sounds like a populist objection to
high electricity prices, but is in fact meaningless. Utilities make money by
recovering costs from ratepayers. Thus, utility investments—whether made to
comply with an RPS or not—are ultimately paid for by ratepayers. Senator
Scott’s objection ignores this fundamental principal of energy markets in an
attempt to score political points with a lofty-sounding but vapid sound bite.
No one should be fooled.
Renewable Portfolio Standards are good energy policy. They
work; the vast majority of states are on track to meet
RPS goals. They do not raise electricity rates more than business as usual.
They create jobs. And they help transition the nation to a carbon-free energy
economy. Claims to the contrary are simply and demonstrably wrong. Hopefully,
the latest efforts to repeal RPSs will face the same failure
as they did last year.
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