Study: States Supporting Green Energy Have Higher Electricity Prices

Published June 20, 2016

States promoting renewable energy through subsidies, mandates, and other programs have the highest electricity costs in the nation, according to an analysis by the Daily Caller News Foundation (DCNF).

For example, DNCF’s report shows California and West Virginia sit on the opposite ends of the energy-price spectrum, likely as a result of their energy policies. DCNF data show California had among the nation’s highest power prices, paying 14.3 cents per kilowatt hour (Kwh), and has 183 policies supporting green energy. West Virginia had among America’s cheapest power prices—consumers there paid 7.91 cents per Kwh—and only 11 policies supporting green energy.

Statistically Significant Correlation

“Statistical analysis run by DCNF found a positive and statistically significant correlation existed between high electricity bills and states with numerous policies supporting green energy,” DCNF wrote. “States which offered rebates, buy-back programs, tax exemptions, and direct cash subsidies to green energy were 64 percent more likely to have higher than average electric bills. For every additional pro-green policy in a state, the average price of electricity rose by about .01 cent per kilo-watt hour.”

Using data from the U.S. Energy Information Administration and the Database of State Incentives for Renewables and Efficiency, DCNF found the highest regional prices for power in the lower 48 states were in northeastern states. For instance, Connecticut’s average electric price was 15.7 per Kwh, while New York’s was 15.4 cents per Kwh.

Two Western states, Washington and Wyoming, had America’s cheapest electricity. Consumers there paid on average 7.1 cents per Kwh and 7.66 cents per Kwh, respectively.

DCNF says Washington State residents enjoy relatively inexpensive power despite having numerous renewable-energy policies because of their access to federally developed hydropower. Most states with relatively inexpensive power, such as West Virginia and Wyoming, relied heavily on coal for electric-power generation. 

High Costs of Subsides and Mandates

According to DCNF’s analysis, “In general, the nation’s cheapest power was found in states which didn’t financially support green energy.”

The federal government also provides incentives to encourage the use of renewable power. Wind power, for example, is subsidized through the Production Tax Credit, which provides wind developers with a tax credit of 2.3 cents per Kwh for electricity generated to the power grid.

DCNF also writes, “[S]olar power receives a 30 percent tax credit from the federal government, which subsidizes solar power 326 times more than it subsidizes coal, oil, or natural gas.”

Wind, Solar Not Free

“The belief that wind and solar power are free is as widespread as it is false,” said Isaac Orr, a research fellow at The Heartland Institute, publisher of Environment & Climate News. “Power derived from wind and solar is far more expensive than from traditional sources.”

“This study shows regulations and subsidies for inefficient and expensive sources of energy have consequences,” said Dan Simmons, vice president for policy at the Institute for Energy Research. “For years, states such as those in the Northeast and California have imposed regulations, subsidies, and mandates on their respective electricity markets, and, as a result, prices for power are much higher there.

“This is a sad and easily foreseeable consequence [of an] ill-considered policy,” Simmons said.

Bonner R. Cohen, Ph.D. ([email protected]) is a senior fellow at the National Center for Public Policy Research.