Tom Steyer, a billionaire former hedge fund manager from San Francisco — who, by his own admission, fell off his ass like Saul of Tarsus and found the one true faith — has all the passion and fiery proselytistic zeal of those who have experienced a Pauline-like conversion. A part of Steyer’s formidable fortune came from his hedge fund’s investments in coal entities overseas, you see, but now, post-Damascus, he is so fervently and fanatically into the crusade of radical environmentalism that he makes Al Gore look like your standard milquetoast Episcopal bishop.
Steyer has spent hundreds of millions of dollars funding Democratic politicians and pet progressive causes. One of those pet causes had been a push to increase Michigan’s Renewable Energy Standard. NextGen Climate Action, one of Steyer’s myriad advocacy organizations, had spent close to $2 million bankrolling a ballot initiative to bring the issue before the voters on Election Day, if the Legislature didn’t act on it beforehand.
Current state mandates require Michigan utilities to generate 15 percent of their sales from renewable sources like wind and solar by 2021. Steyer and his allies sought to increase this to 30 percent by 2030. DTE Energy and Consumers Energy, Michigan’s two largest utilities, decided to go full-appeasement and agreed, sub rosa, to increase the mandate to 25 percent by 2030 if Steyer would end the ballot initiative push. Steyer consented, and so, without the consultation of Michigan’s legislators, the Public Service Commission, or voters, a useless and expensive program has become even more useless and even more expensive.
Renewable energy mandates like Michigan’s (also known as renewable portfolio standards), force expensive, heavily subsidized electricity on ratepayers and taxpayers while providing few, if any, net environmental benefits. A 2014 study from the left-of-center Brookings Institution found wind power is twice as expensive as the conventional power it replaces. Solar power is three times as expensive. This led the study’s author to conclude that “renewable incentives that are biased in favor of wind and solar … are a very expensive and inefficient way to reduce carbon dioxide emissions.”
Retail electricity prices in states with renewable power mandates are rising twice as fast as the national average, and a 2016 study found the total net cost of these mandates in just 12 states was $5.76 billion in 2016, and it will rise to $8.8 billion in 2030.
These higher costs impose real burdens on electricity consumers. Low-income families spend a larger share of their household income paying electricity bills than higher-income families; therefore, any policy that increases the price of electricity will disproportionally affect low-income families. More money spent paying the electric bill means less money for food, rent or a mortgage payment, clothing, transportation, or tuition. It also means families will have less money to save. Even worse, roughly one-quarter of Michiganians already live in “energy poverty,” meaning they spend at least 10 percent of their annual income on energy costs.
At 11.05 cents per kilowatt hour, Michigan residents face the highest retail electricity prices in the Midwest, according to the U.S. Energy Information Administration. That number will surely rise, as will the number of Michiganians living in energy poverty, all because the state’s monopoly energy utilities cowered before the strongarm tactics of a California billionaire, and unilaterally decided, after they sought and got his blessing, what they thought best for the people of Michigan. And they did so without input from the public or the people’s representatives in Lansing. (Never mind that the last time a ballot initiative to raise the Renewable Energy Standard was voted on in 2012, 62 percent of Michiganians rejected it.)
Thomas Fahr Steyer is an alumnus of the Upper East Side’s Buckley School (annual tuition $45,000), the Phillips Exeter Academy (annual tuition $53,000), Yale University (annual tuition $53,000), and the Stanford Graduate School of Business (annual tuition $68,000). The son of a partner at white-shoe Sullivan & Cromwell, a youth who summered on Nantucket, he has most assuredly never once had to worry about the cost of electricity since his birth on third base. He’s obviously a brilliant man, and his career at Farallon, his hedge fund, is legendary on Wall Street, but he has no conception of the harm his pet policy can have on those struggling to keep food on the table or the lights on in the house. His climate zealotry will be costly to working Michiganians.
[Originally Published at The Detroit News]
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.
