The Leaflet: States Reconsider Subsidies for Solar Power

Published May 5, 2016

Across the country, states are considering making reforms to their net metering laws. Net metering grants people the opportunity to sell back to utilities companies the excess energy generated from their solar rooftop panels. The energy is sold back at a rate established by state law. Many state legislators are now debating what the proper reimbursement rate ought to be, with free-market energy experts arguing the price should be set at the wholesale price rather than the market price, since those using net metering are still using the grid and therefore should pay for that use. But this approach is being challenged by the solar industry, which currently enjoys this and other taxpayer-supported solar subsidies.

In a recent Heartlander article, H. Sterling Burnett, managing editor of Environment & Climate News, argues solar subsidies are not fair to all electricity consumers. “Solar subsidies benefit more affluent homeowners at the expense of average and lower-income homeowners, who, even with substantial government support, cannot afford to place solar systems on their homes,” Burnett wrote.

According to a recent Reuters report, Maine’s state legislature is just one of many considering legislation that would replace its net-metering program. Maine is following in the footsteps of other states, such as Hawaii, which has already cut its net-metering rate in half.

According to another article by Reuters, the North Carolina Clean Energy Technology Center at the North Carolina State University reports at least “25 of the 40 U.S. states with net metering policies are reconsidering them.”

Only 3 percent of ratepayers in California, a powerhouse of solar energy, are utilizing a solar power system. Though the state’s electric power regulators voted in January to preserve net metering in a slim 3–2 vote, the narrow victory in such a prominent solar-power state is indicative of states moving away from subsidies and toward a more free-market approach.

Picking energy sector winners and losers is not exclusive to those states who have pro-government net-metering requirements. The federal government has also entered the ongoing battle over energy subsidies with its proposed amendment to the Energy Policy Modernization Act of 2015. The amendment, if passed, would limit the ability of states to reduce subsidies.

In a 2016 Daily Signal article, Nicolas Loris, the Herbert and Joyce Morgan fellow at The Heritage Foundation, argues the Energy Policy Modernization Act of 2015 wrongly encourages renewable energy and efficiency elements at schools and nonprofits and provides subsidies for manufacturers. “A one-size-fits-all regulation or subsidy to artificially elevate the importance of energy efficiency is not only wasting taxpayer dollars, but skewing preferences and market activity,” wrote Loris. “Businesses and families make energy-saving investments when it makes sense for them to do so.”

What We’re Working On

Budget & Tax
Research & Commentary: Don’t Burden Illinois Drivers with Nation-High Gas Tax
Illinois legislators are now considering a bill that would hike the state’s gasoline excise tax by 30 cents per gallon. This increase would bring Illinois’ gas tax to a whopping 60 cents per gallon, which would be the highest rate of any state, according to the Tax Foundation. As the rise in fuel efficiency continues, motor-fuel tax revenues will continue to decline. In this Research & Commentary, Senior Policy Analyst Matthew Glans wrote, “Illinois will have to explore more modern and efficient ways to fund road construction and traffic infrastructure.” Glans recommends legislators consider include privatizing roads and establishing toll systems.  Read more

Research & Commentary: Create an Education Marketplace to Save Detroit Public Schools
On April 9, The Detroit News published a commentary in which Detroit Public Schools (DPS) was labeled a “financial train wreck” and in which the author suggested DPS should be dismantled in its current form. The commentary reflects a troublesome truism of the current handling of DPS and how significantly it is failing. In mid-April, a DPS report estimated the school district’s total debt is $3.9 billion, with over $1 billion in unfunded pension liabilities. From 2000 to 2015, DPS closed 195 schools and student enrollment declined by 71 percent.

In this Research & Commentary, State Government Relations Coordinator Lindsey Stroud wrote, “The City of Detroit is currently in a position in which it can develop and reform DPS, and it should do so by bringing fiscal sanity back to the city and expanding school choice options to parents, which will create an education marketplace that will foster competition and make available a high-quality education to all the students of Detroit.” Read more

Energy & Environment
Research & Commentary: Wind and Solar Energy Growth Driven By Government Mandate
The Lawrence Berkeley National Laboratory has issued the 2016 edition of its annual status report on renewable portfolio standards (RPS) and concludes over half of all growth in renewable electricity since 2000 is due directly to state RPS policies. The report’s findings confirm renewable energy platforms – wind, solar, geothermal, and biomass – cannot survive a market competition with fossil fuels without substantial government subsidies provided for their production and strict government mandates requiring their use. In this Research & Commentary, Policy Analyst Tim Benson and Senior Fellow James M. Taylor say the report finds “60 percent of the growth in renewable electricity generation and 57 percent of renewable electricity capacity since 2000 were tied to state requirements for RPS. States without RPS mandates made up just over 10 percent of RPS additions during this period. Wind energy accounted for 64 percent of the growth in renewable electricity capacity since 2000, and solar power made up 69 percent of RPS growth in 2015. Compliance costs resulting from RPS mandates totaled $2.6 billion in 2014, a $500 million increase over 2013.” Read more

Health Care
Research & Commentary: Ohio Medicaid Expansion Failures
Few states demonstrate the failure of Medicaid expansion better than Ohio. Gov. John Kasich’s (R). Expansion of Medicaid is already beginning to hemorrhage expenses that the state’s budget may not be able to withstand. In 2013, Kasich expanded Medicaid under the auspices of the Affordable Care Act, bypassing the wishes of the Ohio General Assembly, who struck expansion from the state budget and even passed a ban on Medicaid expansion. Opponents of Medicaid expansion note the program is stretching states’ already thin budgets and has a poor track record of providing cost-effective and efficient care for those in need.

In this Research & Commentary, Senior Policy Analyst Matthew Glans points to Ohio as yet another cautionary tale for states that have not expanded Medicaid. Medicaid expansion is an expensive endeavor that research shows fails to provide better or more affordable health care. Read more

From Our Free-Market Friends
Texas Public Policy Foundation’s Fueling Freedom Has Been Delivered!
Texas Public Policy Foundation (TPPF) recently announced the arrival of its new book Fueling Freedom: Exposing the Mad War on Energy by the Honorable Kathleen Hartnett White, a distinguished senior fellow-in-residence and director of the Armstrong Center for Energy and the Environment, and Stephen Moore, a distinguished visiting fellow at The Heritage Foundation.

The book is the product of a lifetime of distinguished work, scholarship, and activism, and it exposes the madness of the “green” war on abundant energy. “The ability to harness the enormous energy packed into fossil fuels – coal, oil, and natural gas – meant that for the first time, most human beings could enjoy a life that was not ‘poor, nasty, brutish, and short.’ Virtually all the necessities of life – food, heat, clothing, shelter – depend on the conversion of energy. It was the transition from muscle, wind, and wood to fossil fuels as the chief source of that energy that gave us modern life.” TPPF is partnering with Regnery Publishing to offer an exclusive pre-order price for Fueling Freedom. Please contact Geoff Krumwiede at [email protected] for more information or to place an order.