Oregon Considers Adopting Costly Renewable Power Mandate

Published June 1, 2007

The Oregon legislature is currently considering Senate Bill 838, which would force consumers to purchase 25 percent of their electricity from renewable sources by 2025.

Although state legislators generally favor encouraging consumers to purchase more renewable power, many are leery of committing to expensive mandates with unpredictable costs.

Wind Power Expensive

If S.B. 838 becomes law, analysts expect wind power to provide the majority of renewable power generation in the state. However, even with substantial government subsidies, wind power cannot yet compete economically with conventional power generation.

“The Oregon legislature would do well to look to the poor record in California from a similar renewable power mandate,” said Tom Tanton, vice president of the Institute for Energy Research.

Because wind power costs are so high, “while California has seen many contracts signed for renewable sources to meet the State’s RPS [renewable power standard], no significant new facility generation has come to fruition, nor is likely to do so,” Tanton noted.

Shaky Promises Offered

Such facts pose a problem for supporters of S.B. 838, who are telling Oregon voters renewable power mandates will not cause an increase in electricity prices.

Those promises are on shaky ground, The Oregonian pointed out on March 21. “Backers of Senate Bill 838 … have been selling the bill as cost-neutral to ratepayers,” the Oregonian reported. “They concede, if pressed, that rates could go up in the short term as utilities build wind farms and that power is added into the regional supply system.”

Price uncertainties are exacerbated by wind power’s failure to live up to previous cost forecasts.

A 2004 study by the Northwest Power and Conservation Council provided cost estimates legislators have used in the past to justify renewable power mandates. However, wind farm construction costs have increased by more than 40 percent since the study was completed. Wind turbines alone have increased in cost 60 percent to 100 percent since 1983, according to the Oregonian.

Consumers Reject It

Meanwhile, Oregon citizens already have the option of voluntarily purchasing government-subsidized wind power. But even though the state passes along subsidies to consumers in the form of reduced prices, wind power still costs up to 10 percent more than conventional power.

As a result, only about 6 percent of Oregon consumers who have the option of buying renewable power currently choose to do so.

“There is a reason why consumers do not willingly purchase renewable generation in large amounts–it is costly and unreliable,” Tanton explained. “Legislation cannot change that.”

Coal Plants Still Necessary

The shortcomings of wind power were further underscored in a March report by the Bonneville Power Administration, a federal agency that markets wholesale electrical power from renewable sources.

According to the report, the construction of new wind farms will not result in fewer natural gas or coal-fired power plants. Wind power is intermittent, the report notes, and wind farms therefore will not eliminate the need to build new coal-fired power plants to ensure adequate power when the wind is not blowing.

Moreover, when the wind does blow, utilities will reduce relatively clean-burning natural gas generation before reducing coal generation, because their use of natural gas is more expensive than their use of coal.

Also, the report notes, existing transmission lines are insufficient to distribute wind-generated electricity to consumers. Expensive new transmission lines will have to be built on what is currently undeveloped land.

“The drive to generate more power from renewable sources is putting pressure on transmission lines,” Tanton explained. “Building more transmission lines will not only be expensive but will also encroach on endangered habitat areas.”

James M. Taylor ([email protected]) is managing editor of Environment & Climate News.

For more information …

[James will supply info on Bonneville Power Administration report.]

“Cost of renewable energy bill unknown for Oregon ratepayers,” by Ted Sickinger, The Oregonian, March 21, 2007, http://www.oregonlive.com/oregonian/stories/index.ssf?/base/business/117445476384120.xml&coll=7