Following passage of the Energy Policy Act of 2005–which was the first major federal energy legislation in 13 years and did not include many of the renewable power mandates championed by anti-fossil-fuel activists–consumers in Maryland and Washington are now facing state-specific renewable power mandates.
Effort Moves to States
The Energy Policy Act provides unprecedented subsidies for many costly or currently unproven “green” technologies. What the activists sought but did not get was a national requirement for utilities to provide a certain percentage of renewable power and engage in expensive conservation and efficiency programs. As a result, the activists have stepped up pressure in the individual states, seeking there what they could not obtain at the federal level.
The activists’ agenda–already achieved in 19 states and the District of Columbia–is to have each state mandate a “Renewable Portfolio Standard” (RPS) and to require utilities to engage in “Demand Side Management” (DSM).
An RPS law requires electric utilities to purchase or produce a certain percentage of their electrical supply from wind, solar, and biomass generation. Other so-called “green” energy sources are also sometimes included. The use of renewable energy must be mandated because it is almost always more expensive than conventional sources and often presents problems of intermittent availability. Utility companies and consumers rarely choose to purchase such power unless forced to do so.
Everyone Must Pay Premium
A DSM program doles out rebates and other incentives for high-efficiency appliances and such practices as weather stripping. The programs involve significant cross-subsidies among utility ratepayers, and they drive up overall costs, which are passed on to customers.
According to consumer surveys, about 75 percent of Americans support renewable power and are willing to pay modest premiums for it. However, experience has shown that when a local utility offers “green power” as a voluntary program, complete with the surcharge necessary to cover the extra cost, only about 2 to 3 percent of customers actually buy it. Thus, anti-fossil-fuel activists lobby for state and federal laws requiring everyone to pay the premium prices for renewable power, whether they desire to or not.
Maryland Law Takes Effect
Pursuant to a new law that took effect January 1, Maryland power companies must buy at least 2.5 percent of their power from a list of renewable sources that includes hydroelectric power. Another 1 percent must be purchased from sources considered still more desirable by environmental activists, such as wind and solar power.
By 2019, power companies in the state will be required to purchase at least 7.5 percent of their power from renewable sources.
Wash. Ballot Initiative Possible
In Washington state, activists are spearheading a petition drive to place a renewable power mandate on the 2006 ballot. Consumers there currently have the option of purchasing renewable power from Puget Sound Energy, but few have been willing to pay the extra cost for the activist-preferred power sources. Activist groups including the Sierra Club and Climate Solutions are seeking to force consumers to purchase power from renewable sources.
If the proposed measure is placed on the ballot and passes, power companies would be required to purchase at least 15 percent of their power from renewable sources by 2020. Importantly, hydroelectric power, which is currently widely used in regional power generation, would not qualify as a renewable power source, although power companies could count some extra energy gained through costly dam upgrades.
“I have mixed feelings” about the proposed mandate, Margi Mann of Olympia, one of the first people to sign up to voluntarily purchase renewable power from Puget Sound Energy, told the Olympian for a January 25 article. “I commend the goals of the environmentalists and other initiative backers, but I’m concerned about making it mandatory.”
Mandates, Costs Unneeded
“Power costs are already high in the Pacific Northwest, which make[s] it difficult for industries” to compete with out-of-state counterparts, said Michael Early, executive director of Industrial Customers of Northwest Utilities, in a January 25 Seattle Times article. Early and other observers point out, moreover, that many utilities have been investing in fish-friendly improvements to dam design; they would not be able to count such environmentally friendly power generation toward the renewable energy mandate.
“Wind power and solar power, the renewable power sources most frequently championed by activists, are significantly more expensive than conventional power sources,” said Marlo Lewis, senior fellow at the Competitive Enterprise Institute. “Just as importantly, these ‘green’ power sources have environmental detriments of their own, such as large-scale bird and bat massacres associated with wind power and the enormous ecological footprint associated with solar power.”
“Renewable power mandates merely accentuate the inefficiency and cost premiums attached to so-called renewable power sources,” said Jerry Taylor, director of natural resource studies at the Cato Institute. “If renewable power saved consumers money, created jobs, or carried any of the other economic benefits so frequently claimed by environmental activists, then government would not have to pass a law to force power companies to purchase it or consumers to buy it.”
Jim Clarkson ([email protected]) is a member of the board of directors for the Institute for Energy Research.
For more information …
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