One of the most effective ways to reduce the purchasing power of every person and business in North Carolina would be to raise energy costs.
Everyone and everything relies on energy, so artificially increasing the price of electricity automatically reduces the amount of money left over to spend on anything else. Unfortunately, this is exactly what the state’s renewable portfolio standard (RPS) does to N.C. residents.
Passed in August 2007, the RPS requires investor-owned utilities to generate 12.5 percent of their retail electricity sales from renewable energy by 2021. Municipal utilities and cooperatives must meet a target of 10 percent renewables by 2018.
According to the U.S. Energy Information Administration, those renewable but intermittent energy sources, such as wind and solar, are significantly more expensive per kilowatt-hour than conventional sources, and those costs are being passed along to ratepayers.
Supporters say these costs pay for greater environmental protection, but there is little evidence of that. Wind and solar technologies are diffuse, which means harnessing them requires copious amounts of land, resulting in reduction of wildlife habitat, which scientists say is the leading cause of species endangerment.
What about pollution? If there’s one thing you can’t argue against, it’s that renewables are 100 percent pollution-free, right? Wrong. Every second the sun doesn’t shine or a wind turbine doesn’t spin, fossil fuel generators are required to provide electricity instead. Revving fossil fuel generators up and down this way can emit more pollutants than if they were allowed to run more efficiently as the primary power source.
So what are N.C. residents getting in return for their higher costs? Reduced economic competitiveness, less investment, and diminished job growth. The beneficiaries are the companies that produce the renewable electricity.
A report by the John Locke Foundation and Beacon Hill Institute found ratepayers will fork over nearly an additional $2 billion from 2008 through 2021 because of the RPS mandate. This means by 2021 the real disposable income of North Carolinians will shrink by nearly $59 million and more than 3,500 net jobs will be lost.
But far more serious is the matter of who the law hurts most: low-income families and seniors.
Families living on a low income and seniors on a fixed income have the least capacity to spend higher percentages of their income on energy, so they’ll feel the most pain. A repeal of the renewable portfolio standard would provide them much-needed relief.
In some ways, the standard is like a giant, regressive tax increase. And like many tax hikes, the RPS reduces government revenue instead of increasing it. It cuts revenue by reducing growth while placing further strain on government budgets through higher energy costs. That will surely lead to even more tax hikes. The renewable portfolio standard is truly all pain and no gain.
Whether you’re a fiscal conservative, social egalitarian or environmentalist, the renewable portfolio standard is a severe violation of your principles. It’s no surprise that in the past three years legislators in states such as Colorado, Minnesota, Michigan, Montana, and Ohio have introduced bills to repeal the requirements, and several more states are considering reducing or freezing them.
Legislation was filed in North Carolina last month to repeal the standard. With unemployment above 9 percent, North Carolina is in no position to force expensive energy on the state’s hard-pressed consumers. Renewable energy can and should have a chance to develop, but it shouldn’t be done on the backs of the people, especially the poorest and most vulnerable, by mandating the use of higher-cost intermittent energy sources.
Taylor L. Smith (email@example.com) is a policy analyst at The Heartland Institute.
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