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Energy Policy & the
Environment Report
No. 10 February 2012
THE HIGH COST OF RENEWABLE-ELECTRICITY MANDATES
Robert Bryce, Senior Fellow, Manhattan Institute
EXECUTIVE SUMMARY
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PRESS RELEASE >>
IN THE NEWS
Gouged by the Wind, Wall Street Journal, 5-5-12
The ‘Clean Energy’ Stalking Horse, The Weekly
Standard, 04-02-12
Clean Energy Standard: Another Energy Tax in
Disguise, Heritage Foundation, 3-7-12
Editorial: Carbon-Cutback Debate Heating Up, Orange County Register, 3-6-12
Obama's Energy Plan: Costs Rise,
Jobs Decline, Fiscal Times, 3-5-12
A Stealth Carbon Tax?, National Review Online, 3-5-12
Are Renewable Energy Credits Excessively Expensive?,
SmartMeters, 3-5-12
Drop In Natural Gas Prices Brings Changes, McClatchy Tribune, 3-4-12
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| Table
of Contents: |
| Executive Summary |
| About the Author |
| Introduction |
| Key Findings: Comparing Electricity Prices in RPS and Non-RPS States |
| Comparing Rates in Coal-Dependent States |
| In Washington, a Battle of the Estimates |
| In the States, Rising Rates and Raised Alarms |
| Cost Comparison: Conventional Sources versus Renewables |
| Renewable Energy's Additional Costs |
| Other Factors Pushing Electric Costs Up |
| Rising Electricity Prices and Their Impact on the Economy |
| Conclusion |
| Endnotes |
Motivated by a desire to reduce carbon emissions, and in the absence of federal action to do so, 29 states (and the
District of Columbia and Puerto Rico) have required utility companies to deliver specified minimum amounts of electricity
from "renewable" sources, including wind and solar power. California recently adopted the most stringent of
these so-called renewable portfolio standards (RPS), requiring 33 percent of its electricity to be renewable by 2020.
Proponents of the RPS plans say that the mandated restrictions will reduce harmful emissions and spur job growth,
by stimulating investment in green technologies.
But this patchwork of state rules—which now affects the electricity bills of about two-thirds of the U.S. population
as well as countless businesses and industrial users—has sprung up in recent years without the benefit of the states
fully calculating their costs.
There is growing evidence that the costs may be too high—that the price tag for purchasing renewable energy, and
for building new transmission lines to deliver it, may not only outweigh any environmental benefits but may also be
detrimental to the economy, costing jobs rather than adding them.
The mandates amount to a "back-end way to put a price on carbon," says one former federal regulator. Put another
way, the higher cost of electricity is essentially a de facto carbon-reduction tax, one that is putting a strain on a struggling
economy and is falling most heavily, in the way that regressive taxes do, on the least well-off among residential users.
To be sure, the mandates aren't the only reason that electricity costs are rising—increased regulation of coal-fired
power plants is also a major factor—and it is difficult to isolate the cost of the renewable mandates without rigorous
cost-benefit analysis by the states.
That said, our analysis of available data has revealed a pattern of starkly higher rates in most states with RPS mandates
compared with those without mandates. The gap is particularly striking in coal-dependent states—seven such
states with RPS mandates saw their rates soar by an average of 54.2 percent between 2001 and 2010, more than
twice the average increase experienced by seven other coal-dependent states without mandates.
Our study highlights another pattern as well, of a disconnect between the optimistic estimates by government policymakers
of the impact that the mandates will have on rates and the harsh reality of the soaring rates that typically
result. In some states, the implementation of mandate levels is proceeding so rapidly that residential and commercial
users are being locked into exorbitant rates for many years to come. The experiences of Oregon, California, and Ontario
(which is subject to a similar mandate plan) serve as case studies of how rates have spiraled.
A backlash may result that could even imperil the effort to protect the environment. Some of the renewable-energy
projects being built in California are so expensive that "people are going to get rate shock," according to Joe Como,
acting director of the Division of Ratepayer Advocates, an independent consumer advocacy arm of the California
Public Utility Commission. "In the long run," he said recently, the approval of overpriced renewable energy will harm
"the states’ efforts to achieve greenhouse gas reductions."
Given that the RPS mandates have not received enough study and that they appear to be posing risks to a fragile
economy, the prudent course of action is to put the state programs on hold. Existing mandates should be suspended
and new ones blocked pending a thorough cost-benefit analysis to determine responsible levels of renewable electricity.
In the meantime, where practical, natural gas, the cleanest conventional fuel as well as the least expensive,
could fill any gaps in energy supply.
ABOUT THE AUTHOR
ROBERT BRYCE is a senior fellow at the Manhattan Institute's Center for Energy Policy and the Environment. He has
been writing about energy for two decades and his articles have appeared in numerous publications ranging from
The Wall Street Journal to The New York Times and the Atlantic Monthly to the Washington Post. Bryce's first book,
Pipe Dreams: Greed, Ego, and the Death of Enron, was named one of the best nonfiction books of 2002 by Publishers
Weekly. In 2008, he published Gusher of Lies: The Dangerous Delusions of "Energy Independence". A review of
Gusher of Lies in The New York Times called Bryce "something of a visionary and perhaps even a revolutionary." His
fourth book, Power Hungry: The Myths of "Green" Energy and the Real Fuels of the Future, was published in April
2010 by PublicAffairs. The Wall Street Journal called Power Hungry "precisely the kind of journalism we need to hold
truth to power." The Washington Times said Bryce's "magnificently unfashionable, superlatively researched new book
dares to fly in the face of all current conventional wisdom and cant." Bryce appears regularly on major media outlets
including CNN, FOX News, PBS, NPR, and the BBC. He received his B.F.A. from the University of Texas at Austin in 1986.
INTRODUCTION
Over the past few years, 29 states, as well as the District
of Columbia and Puerto Rico, have adopted mandates
requiring the use of renewable electricity.[1] These
mandates, known as renewable portfolio standards
(RPS), require electricity providers to supply a specified minimum
amount of power to their customers from sources that qualify as
"renewable," a category that includes wind, solar, biomass, and
geothermal.
Acting in the absence of a national renewable-energy plan, state
policymakers have cited a desire to reduce carbon dioxide emissions
and the need to create jobs as prime justifications for the RPS rules.[2]
In April 2011, in signing into law a bill that raised California’s RPS
minimum to 33 percent by 2020, from 20 percent, Governor Edmund
G. Brown said that the measure would stimulate investment in
green technologies, create tens of thousands of jobs, improve air
quality, promote energy independence, and reduce greenhouse
gas emissions.[3]
The federal Environmental Protection Agency (EPA) is similarly bullish
on the state programs. The RPS rules are designed "to stimulate market
and technology development," the agency says, "so that, ultimately,renewable energy will be economically competitive with
conventional forms of electric power. States create RPS
programs because of the energy, environmental, and
economic benefits of renewable energy."[4]
Although supporters of renewable energy claim that
the RPS mandates will bring benefits, their contribution
to the economy is problematic because they also
impose costs that must be incorporated into the utility
bills paid by homeowners, commercial businesses,
and industrial users. And those costs are or will be
substantial. Electricity generated from renewable
sources generally costs more—often much more—than that produced by conventional fuels such as coal
and natural gas. In addition, large-scale renewable energy
projects often require the construction of many
miles of high-voltage transmission lines. The cost of
those lines must also be incorporated into the bills
paid by consumers.
These extra costs amount to a "back-end way to put a
price on carbon," says Suedeen Kelly, a former member
of the Federal Energy Regulatory Commission.[5] Indeed,
with Congress unwilling to approve national carbon
dioxide restrictions or renewable-energy quotas, the
RPS mandates have become a sprawling state system
of de facto carbon-reduction taxes.
Despite the increasing stringency of the RPS rules and
their growing geographic reach—the mandates now
affect about two-thirds of the U.S. population—the
sheer magnitude of those "taxes" is not known, and
the ability of the economy to bear them is not certain
because few, if any, states have fully calculated the
costs that the mandates will impose.
California, for example, did not analyze the potential
cost of increasing its mandate to 33 percent. When asked
why, the lieutenant governor, Gavin Newsom, said that
the state was not overly concerned with the cost, calling
the 33 percent requirement "a stretch goal."[6]
California is far from alone. "Most of these mandates
are adopted without any analysis of the impact of
increasing electricity bills, at least in the short run, on
various types of residential customers, particularly low
income customers," Barbara R. Alexander, a consumer affairs consultant, wrote in a 2009 report for the Oak
Ridge National Laboratory.[7]
Several federal estimates of rate increases on a national
level have painted a very rosy picture. A 2009 report
issued by the Energy Information Administration (EIA),
for example, concluded that if a national RPS were
adopted, it would not "affect average electricity prices
until after 2020" and that the "peak effect" on prices
would be less than 3 percent.[8]
But just a year later, a report by the Center for Data
Analysis at the Heritage Foundation came to a far
different conclusion. The Heritage study estimated
that by 2035, a national RPS mandate would raise
residential electricity rates by 36 percent above the
baseline price and industrial rates by 60 percent above
the baseline price.[9]
Our analysis of the various RPS mandates at the state
level shows that predictions of much higher prices are
proving to be the reality. We have found a pattern of
starkly higher rates in most states with RPS mandates
compared with those without mandates. The gap
is particularly striking in coal-dependent states—a
group of seven such states with RPS mandates saw
their rates soar by an average of 54.2 percent between
2001 and 2010, more than twice the average increase
experienced by seven other coal-dependent states
without mandates.
The timing of widespread implementation of RPS
mandates couldn’t be worse. The higher costs of
renewable energy can't help but have a dampening
effect on the revival of the U.S. economy. Because
utility rate increases have a disproportionate impact on
the pocketbooks of residential users, with the heaviest
burden falling on the least well-off, the higher costs
imposed by the mandates are being felt the most in the
ranks of the unemployed and among the record number
of some 46 million Americans receiving food stamps.
The implementation of the mandates is proceeding so
rapidly under the pressure of looming deadlines that
some homeowners and businesses are being locked
into exorbitant rates for years—even decades—to
come, our analysis shows.
Beyond the costs to the economy, the effort to protect
the environment is ironically also at risk.
Some renewable-energy projects being built in
California are so expensive that "people are going
to get rate shock," Joe Como, acting director of the
Division of Ratepayer Advocates, an independent
consumer advocacy arm of the California Public
Utility Commission, told the San Jose Mercury-News in November 2011. "In the long run," he said,
the approval of overpriced renewable energy will
harm "'the states' efforts to achieve greenhouse gas
reductions."[10]
Given that the cost of RPS mandates has not received
enough study and that the available evidence to date
suggests that the mandates are posing large risks to a
fragile economy, we propose that the RPS programs
be put on hold. We recommend these three steps:
- No new mandates should be adopted without
a thorough cost-benefit analysis to determine
prudent levels of renewable electricity.
- Natural gas, which emits about half as much carbon
dioxide during combustion as coal, should be used
where practicable to fill the gaps in energy supply.
- Where necessary, suspend or eliminate renewable energy
mandates to ensure that electricity is
affordable.
KEY FINDINGS: COMPARING ELECTRICITY PRICES IN RPS AND NON-RPS STATES
Although the push for more renewable
energy is contributing to the rising cost
of electricity, it’s certainly not the only
factor—new environmental regulations and overall
expansion of the electricity transmission system
are also to blame. Without rigorous cost-benefit
analysis by the states, it’s difficult to isolate the cost
of the renewable mandates from these other factors.
Indeed, other variables—including the relatively low
price of natural gas, which is undercutting the cost
of coal-fired generation as well as wind-generated electricity in some regions—make "apples-to-apples"
comparisons difficult.
That said, we have compared the costs of electricity in
RPS and non-RPS states, using price information from
the EIA. Our analysis has revealed a pattern of mostly
higher costs in states with RPS mandates:
- In 2010, the average price of residential electricity
in RPS states was 31.9 percent higher than
it was in non-RPS states. Commercial electricity
rates were 27.4 percent higher, and industrial
rates were 30.7 percent higher.
- In the ten-year period between 2001 and
2010—the period during which most of the
states enacted their RPS mandates—residential
and commercial electricity prices in RPS
states increased at faster rates than those in
non-RPS states.
- Of the ten states with the highest electricity
prices, eight have RPS mandates.
- Of the ten states with the lowest electricity prices,
only two have RPS mandates.
- Sixteen of the 18 states with residential rates that
are higher than the 2010 U.S. average residential
rate are RPS states.
- Nineteen of the 21 non-RPS states have residential
rates that are below the U.S. average.
COMPARING RATES IN COAL-DEPENDANT STATES
To get closer to an "apples to apples" comparison
of electricity rates, we focused on seven states
with RPS mandates and seven without. All
14 are heavily dependent on coal—responsible, on
average, for 63 percent of their electricity—and also
on natural gas. To be certain, this is not a perfect
comparison. The combined population of the non-
RPS states is only about half that of the states with
RPS mandates, for example. Nevertheless, a striking
pattern of higher rates in coal-dependent RPS states
emerged from this analysis:
- Coal-dependent states with RPS mandates have
residential rates 37.6 percent higher than those
in coal-dependent non-RPS states.
- Between 2001 and 2010, electricity rates in the coaldependent
RPS states increased by an average of
54.2 percent, more than twice the increase seen in
the coal-dependent non-RPS states.
- In 2001, the average price of residential electricity
in the coal-dependent RPS states was 10.9 percent
higher than the average price in the coal-dependent
non-RPS states. By 2010, that differential had more
than tripled, to the 37.6 percent figure cited above.
Put another way, in 2001, the average price of
residential electricity in the coal-dependent non-RPS
states was 7.20 cents per kilowatt-hour. That same
year, that amount of electricity in an RPS state cost
7.98 cents. By 2010, the cost of a kilowatt-hour of
electricity in the non-RPS states had increased to 8.95
cents but in the RPS states had soared to 12.31 cents.
IN WASHINGTON, A BATTLE OF THE ESTIMATES
On the national level, the debate about the
cost of renewable-energy mandates has been
marked by optimistic predictions of minor
increases from the government and estimates of much
higher costs from a number of outside analysts.
For instance, a 2008 report by the federal government's
National Renewable Energy Laboratory said that if the
U.S. were to achieve the goal of having 20 percent of
its electricity produced by wind in 2030, the total cost
would be "less than 0.06 cents (6 one-hundredths of
1 cent) per kilowatt-hour of total generation by 2030,
or roughly 50 cents per month per household." While
the report says that the 20 percent wind scenario could
"increase total capital costs by nearly $197 billion,"
those expenses would largely be offset by some $155
billion in decreased fuel costs.[12]
In 2009, the EIA examined the likely effect of a national
RPS and predicted that the "peak effect" on average
electricity process would be less than 3 percent.[13]
That conclusion was challenged by the Center for
Data Analysis at the Heritage Foundation. In its 2010
report, Heritage not only predicted soaring increases
from a national RPS—residential rates up by 36
percent and industrial rates up by 60 percent—but
it also said that the mandate would cost the country
more than 1 million jobs and the average family of
four about $2,400 per year. In addition, it said that
annual GDP would be cut by an average of $218
billion through 2035.[14]
"After all, if electricity created by wind and other
renewables were cost competitive, consumers
would use more of it without a federal law to force
consumption," Heritage said in the report, by way
of explaining its assessment of much higher costs.
"Recent experience with the mandate for renewable
fuels like corn ethanol also suggests significant cost
increases as well as technical shortcomings. While
proponents argue that wind is free, harnessing it into
useful electricity certainly is not."
In July 2011, Bentek Energy, a Colorado-based energy
analytics firm, released ked
at the effect that wind energy was having on carbon
dioxide emissions and concluded that wind energy is not "a cost-effective solution for reducing carbon dioxide
if carbon is valued at less than $33 per ton."[15]
In October 2011, the EIA revisited the question of
renewable energy with a report that looked at the
impact of a national "clean energy standard." During
his State of the Union speech in 2011, President Barack
Obama set a goal that would have 80 percent of U.S.
electricity coming from clean energy sources by 2035.[16]
(The president reiterated his support for a clean energy
standard during his 2012 State of the Union speech.)[17]
The EIA projected that through 2015, increases
in electricity prices under a national clean energy
standard would be "negligible" because of existing
generation capacity.[18] It also found that the likely effect
on growth was, at worst, a decrease of less than 1
percent. By 2025, electricity prices would increase by
16 percent because of the clean energy policy. And
by 2035, the EIA projects, the average price would
exceed what it calls the "reference case average" by
29 percent.[19]
But the average numbers do not tell the entire story.
The EIA analysis found that by 2035, the clean
energy standard would result in hikes of at least 40
percent in seven regions, with the impact likely to
be biggest on the areas that are dependent on coal.
By 2035, when compared with the reference case,
electricity prices would rise by 42 percent in Texas,
46 percent in Oklahoma, 47 percent in Tennessee
and Kentucky, 48 percent in Colorado, 50 percent in
eastern Pennsylvania and New Jersey, 51 percent on
Long Island, and by 61 percent in southern Illinois
and eastern Missouri.[20]
The EIA tested the impact of a clean energy standard
against a range of scenarios, including a low- and
high-cost coal case, a low- and high-cost renewable energy
case, a low- and high-cost natural gas case, and
a low- and high-cost nuclear case. That methodology
yielded a telling conclusion in the EIA's report: a clean
energy standard "leads to higher electricity prices in
all of the sensitivity cases."[21]
In October 2011, the Manhattan Institute published a
paper that concluded that the proposed effort to obtain 20 percent of domestic electricity from wind energy
would "impose a tax on U.S. electricity consumers of
$45 to $54 for each ton of carbon dioxide that was
removed." It also predicted "an increase of as much
as 48 percent over the current price of residential
electricity in coal-dependent regions of the country."[22]
Estimates of high costs are not unique to the United
States. Several European studies have also found high
costs in the push toward renewables. In June 2011,
the Renewable Energy Foundation, a British nonprofit
group, estimated that the subsidies needed to meet
Britain's renewable-energy goals would total about $155
billion by 2030.[23] Similarly, the Committee on Climate
Change, which advises the British government on climate
matters, issued a report in May 2011, which estimated
that meeting the country's renewable goals would
require an expenditure of some $10 billion per year.[24]
At that rate, the cost of meeting Britain's renewable
mandates would be about $160 per Briton, per year.[25]
Late last year, the consulting firm KPMG estimated
that meeting Britain's carbon dioxide reduction goals
would require spending over $300 billion, with at least
$170 billion of that sum going to wind projects. All that
money would have to be spent by 2020.[26] Put another
way, for each of the next nine years, the U.K. would
have to spend about $19 billion on new wind projects,
or about $300 per year, per British citizen. KPMG also
found that using natural gas–fired generation along
with new nuclear plants would save the U.K. about
$53 billion when compared with a plan that relied
more heavily on renewables.[27]
IN THE STATES, RISING RATES AND RAISED ALARMS
Although President Obama and a number of
members of Congress still favor a national
renewable-energy mandate, the states remain
in the forefront of renewable policymaking and have
become the battleground over rising rates.
In 1983, Iowa became the first state to mandate the
use of renewable energy, by requiring its investorowned
utilities to contract for a combined total of 105 megawatts of generation capacity from renewable
sources.[28] Since then, 28 other states have passed RPS
measures, most of them enacted since 1997. In addition,
eight states have set RPS goals. (The District of Columbia
has a mandate for 20 percent renewables by 2020;
Puerto Rico has a 20 percent mandate by 2035.)
The states with RPS mandates have changed their
rules over time. Between 1997 and 2009, the states
increased their renewable mandates by over 76,000
megawatts of new capacity.[29] Given that total U.S.
generation capacity is just over 1 million megawatts,
the renewable capacity mandates amount to about 7.6 percent of all capacity.[30] States in the southeastern
U.S. are notable for their continued refusal to adopt
renewable-energy mandates or goals, a reflection,
perhaps, of the lack of good wind-energy resources
in the region.
In 2009, the U.S. House of Representatives passed the
American Clean Energy and Security Act, a measure
also known as the Waxman-Markey cap-and-trade bill,
which was aimed at limiting carbon dioxide emissions
and spurring the development of renewable energy.
The measure failed to pass in the Senate. And Congress
is unlikely to pass any legislation in the foreseeable
future that imposes federal carbon dioxide restrictions
or renewable-energy quotas.
As a result, the states, as well as a few cities, are the
key drivers for renewable-energy policy in the United
States. In November 2011, governors from 23 states
sent a letter to leaders of Congress imploring them
to pass a multiyear extension of the wind-energy
production tax credit of $0.022 per kilowatt-hour
produced. Not doing so, said the governors, would "result in a significant loss of high-paying jobs in a
growing sector of the economy."[32] At the time this
report was published, Congress had not extended the
production tax credit.
The states have provided their own subsidies and
favorable tax policies to encourage renewable-energy
projects. For instance, Texas has extended over $700
million in property-tax breaks to wind projects, and
Oregon has provided several hundred million dollars
in tax credits to businesses that invest in renewable energy
projects. Meanwhile, New Jersey has become
a haven for solar energy. The state now has nearly
a quarter of all the solar installations in the U.S.,
thanks to an aggressive mandate. By 2026, the state
plans to have 5,000 megawatts of solar capacity.[33]
For comparison, in 2010, total U.S. solar capacity
was 941 megawatts.[34]
How have the states fared with the mandates? We have
examined the real-world experiences of Oregon and
California as well as Canada's Ontario province, which
has been following a similar mandate plan. In all three
cases, rising costs are raising alarms.
ONTARIO
Ontario, Canada's most populous province, is phasing
out over 7,500 megawatts of coal-fired capacity over
the next three years while dramatically increasing the
use of renewable energy.[35] The shift is mandated by
the province's Green Energy Act, which requires the
installation of 25,000 megawatts of renewable-energy
capacity by 2025.[36]
By all accounts, the program is resulting in significant
price increases despite a prediction by the provincial
government as recently as 2009 that the renewable
mandate "would lead to modest hikes in household
electricity bills of about 1% annually."[37]
Just a year later, in November 2010, the government
sharply revised that view, saying that "over the next
five years, residential electricity prices are expected
to rise by 46 percent, after which price increases are
expected to moderate as Ontario will have largely
completed the transition to a cleaner, more reliable
system."[38] Under the province's renewable program,
some producers of solar-generated electricity are
being paid as much as 80 cents (Canadian) for every
kilowatt-hour of energy, an astonishing 700 to 1,500
percent more than the average price in Ontario for
residential and commercial electricity.[39]
In October 2011, Glenn Fox, a professor of naturalresource
economics at the University of Guelph,
and Parker Gallant, a retired banker, put forward
an estimate that was even starker. Their report,
which was published in the peer-reviewed Bulletin
of Science & Society, estimated additional costs by
2018 of over $2,300 a year for the average ratepayer,
"well over a doubling" in rates. "Put another way,"
the study said, "Ontario's ratepayers will be paying in
excess of 40¢ per kWh, placing them on a par with
Denmark, which suffers the highest cost of electricity
in the developed world."[40]
In December 2011, Ontario auditor General Jim
McCarter issued a report critical of the province's
rush to deploy renewables. "There has been a lack of
analysis that you'd normally find when you're investing
billions of dollars," McCarter said.[41] In a news release, he called for "an objective cost-benefit assessment of
the progress made to date to provide government
decision-makers with the information they need to
strike an appropriate balance between the promotion
of green energy and the price of electricity."[42]
OREGON
In 2007, the Oregon legislature passed a bill that
requires large utilities in the state to obtain 25 percent
of their electricity from non-hydro renewable projects
by 2025.[43]
Nearly two-thirds of the electricity generated in
Oregon comes from hydroelectric facilities.[44] The
state's vast hydropower capacity has kept costs low;
with residential electric rates of about 8.9 cents per
kilowatt-hour, Oregon has the ninth-lowest electricity
prices in the U.S.
But the renewable mandate is forcing utilities to
increase their prices. Last year, Pacific Power, which
supplies electricity to 555,000 customers in Oregon,
hiked its rates by 14.5 percent.[45] The biggest reason for
the cost increase: a new transmission line needed to
connect the state’s customers with two wind projects
in Wyoming. The result of the rate hike: the average
residential customer who relies on electricity from
Pacific Power is now paying about $9.38 more per
month, or about $112.56 per year.[46]
The other big utility in Oregon, Portland General
Electric, which has more than 800,000 customers in the
Portland/Salem metropolitan area, hiked rates by 4.2
percent in 2011.[47] It appears that the Biglow Canyon
wind project, which cost $1 billion, was the driving
force behind that increase.[48]
Portland General has a slate of renewable projects in
the queue that are likely to lead to further increases.
Among them: a 210-mile transmission line that will
carry wind-generated electricity into the utility's service
area. That project, known as Cascade Crossing, is
expected to cost between $800 million and $1 billion.[49]
In late 2010, The Oregonian reported that Portland
General has "outlined a slate of capital projects for
Oregon regulators that includes new wind resources, transmission and gas plants that could cost $2.5 billion
during the next four years-a sum that is almost double
the utility's rate base today."[50]
In March 2011, the Beacon Hill Institute and Cascade
Policy Institute issued a report analyzing the effect
that Oregon's RPS mandate would have on electricity
prices. Their conclusion: rates are likely to increase by
23.9 percent by 2025. In addition, the report estimates
that the overall cost to the Oregon economy from 2015
to 2025 will be $6.8 billion.[51]
CALIFORNIA
With its new mandate to have 33 percent of its
electricity from renewable sources by 2020, California
has the most ambitious RPS program in the United
States. In all likelihood, it is also the most expensive,
with costs that even state regulators acknowledge will
be enormous.
In a June 2009 report, the California Public Utilities
Commission (CPUC) concluded that the 33 percent
goal was "highly ambitious, given the magnitude of
the infrastructure build-out required."[52] It estimated the
cost of the build-out "at approximately $115 billion
between now and 2020, in an uncertain financial
environment."[53]
That $115 billion amounts to some $3,100 for every
Californian.[54] And those costs are coming at a time
when California faces enormous budget pressures
and persistently high unemployment. For fiscal year
2012, California has a projected budget shortfall of $23
billion, or about 27 percent of its general fund budget.
And the state will likely face an additional shortfall
of $10.3 billion in fiscal year 2013.[55] In December
2011, California’s unemployment rate stood at 11.1
percent, the second-highest rate in the U.S., behind
only Nevada.[56]
What's more, California's electricity rates are already
high—the tenth-highest in the U.S., with an average
retail price of $0.1475 per kilowatt-hour.[57]
In January 2011, three months before Governor Brown
signed the new mandate into law, the Los Angeles Times reported that the L.A. Department of Water and
Power was warning city officials against pursuing a 33
percent mandate and to opt instead for a more modest
goal. The department, America's largest municipally
owned utility, warned the city that the 33 percent
mandate, "when combined with other long-term
expenses at the DWP, could result in electricity rate
hikes of 5 to 8 percent in each of the next five years."[58]
The high cost of renewable-energy projects in
California has led to a number of objections from
the Division of Ratepayer Advocates, the CPUC's
independent consumer advocacy arm. In February
2011, the consumer advocate group issued a report
called "Green Rush," which found that 59 percent
of the renewable-energy contracts that had been
approved by the CPUC were allowing generators
to sell their electricity at an average price of $104
per megawatt-hour, a level that is far higher than
market value.[59] (The EIA estimates the average cost
of natural gas–fired electricity from a combined-cycle
generation facility at about $66 per megawatt-hour.)[60]
Thus, policymakers are forcing state residents to buy
renewable electricity that costs at least 50 percent
more than if that same energy came from natural gas.
The Division of Ratepayer Advocates also found that
"of the 184 renewable-energy contracts presented to
the CPUC for approval since 2002, only two have
been rejected." One result: the state has been forced
to pay over $6 billion to three utilities in order to
cover the cost of renewable energy that exceeds the
cost of comparable conventional generation. The ratepayer agency says that the $6 billion is "over
seven times CPUC-specified amounts. When these
renewable contracts start delivering energy, costs
will impact ratepayers."
In November, the agency was again objecting to the
high costs. It issued a press release that "expressed
its disappointment" with the state's approval of the
Abengoa solar project in the Mojave Desert. Joe Como,
the acting director, said that by approving the Abengoa
project and another solar project known as North Star,
the CPUC was "signaling to the market that California
will accept overpriced renewable energy, and that it is
willing to lock customers into higher rates for decades
to come…. We should be getting twice the amount
of renewable energy for the price of this contract."[61]
COST COMPARISON: CONVENTIONAL SOURCES VERSUS RENEWABLES
Although the cost of renewable energy may
someday be competitive with conventional
sources of power, that generally isn't the case
today and likely won’t be for years to come.
In June 2011, the Electric Power Research Institute (EPRI),
an independent science and research organization,
released a report on technology innovation in
electricity generation. The report examined fossil- and
nuclear-based technologies, as well as four renewable
technologies.[62] EPRI found that burning natural gas
was, by far, the cheapest way to generate electricity, and it predicted that gas would continue to provide
the lowest-cost option through 2025.
In 2015, generating a megawatt-hour of electricity with
natural gas will cost between $49 and $79, according to
EPRI estimates. That same quantity of energy produced
from onshore wind will cost between $75 and $138,
while generating it with solar photovoltaic will cost
at least $242 and as much as $455.[63] By 2025, very
little will have changed, EPRI says: gas-fired electricity
production will have gone down a few dollars, to
between $47 and $74 per megawatt-hour, leaving it
comfortably ahead of onshore wind generation, down
only marginally as well, to a range of $73 to $134 per
megawatt-hour.
The latest cost estimates from the EIA are similar to
those made by EPRI. By 2016, the EIA expects that
electricity from onshore wind turbines will cost $97
per megawatt-hour. That's about 50 percent more than
the same amount of electricity generated by natural
gas, which the EIA estimates will cost $63. Offshore
wind will be even more expensive, coming in at
$243 per megawatt hour. The least expensive form
of solar-generated electricity—the type generated by
photovoltaic panels—will cost $210, or more than
triple the cost of gas-generated electricity.[64]
Contrary to the claims of many environmental groups,
the cost of new wind-energy installations has actually
been rising. In November 2010, the EIA estimated that
installing a megawatt of wind-generation capacity on
land would cost $2.43 million.[65] That's a major increase
over the estimate of $1.7 million per megawatt
used by the National Renewable Energy Laboratory
in a report that it issued in 2008.[66] Offshore-windgeneration
costs are also climbing. The latest EIA
estimate for installing one megawatt of offshore capacity
is $5.97 million.[67] In 2009, the EIA estimated
that cost at $3.4 million.[68]
The rising cost of wind energy installations provides
a stark contrast to what is occurring in the natural gas
market, where prices have fallen precipitously. Over the six-year period from 2003 to 2008, (the period just
before the beginning of the shale revolution), domestic
natural gas prices averaged about $7 per thousand
cubic feet.[69] In mid-February 2012, the spot price for
natural gas was about $2.50.[70] If we assume the price
reduction is $4 per thousand cubic feet, the savings
for consumers is at least $263 million per day.[71]
That low-cost gas is directly competing with renewable
sources in general and wind energy in particular. In
early 2011, Dallas-based energy investor T. Boone
Pickens said that it was difficult to obtain financing
for a wind project "unless you have $6 gas."[72] In
February 2012, Pickens again cited the $6 price floor
for natural gas as being essential to the economics of
wind-energy projects.[73]
Cheap natural gas is also displacing coal, a fuel that has
long been among the cheapest options for electricity
production. In December 2011, Exxon Mobil Corp.
predicted that natural gas will overtake coal as the
primary fuel in the domestic electricity market by
2025.[74] Furthermore, the surfeit of low-cost gas is
helping reduce electricity costs. A January 2012 report
by Standard & Poor's Financial Services LLC found that
in some regions of the country, wholesale electricity
prices had declined by more than 50 percent since
2008 due to cheap supplies of gas.[75]
RENEWABLE ENERGY'S ADDITIONAL COSTS
While the costs related to renewable-energy
mandates will ultimately be paid by
consumers, there are other costs that will
not be found on electricity bills. Billions of dollars in
federal grants, loan guarantees, and tax credits have
been disproportionately lavished on renewable-energy
projects. Those subsidies are invisible to ratepayers but
are nonetheless a cost that affects the broader economy.
When measured on the amount of energy actually
produced, it’s apparent that the renewable industry is
getting subsidies that are far in excess of those given
to the hydrocarbon sector. For instance, the federal
production tax credit of $0.022 for each kilowatt-hour
of electricity produced by wind amounts to a subsidy of $6.44 per million BTUs of energy produced. For
comparison, the current price of natural gas is less than
$3 per million BTUs. Put another way, the subsidy
provided to wind-energy producers is more than twice
the market price of natural gas.
In 2010, the EIA estimated total "subsidies and support"
for renewable-energy programs at $14.6 billion. Of
that amount, the biofuels sector collected the largest
sum, $6.6 billion. The wind industry collected $4.98
billion.[76] Of that $4.98 billion, $4.8 billion was awarded
under section 1603 of the American Recovery and
Reinvestment Act (also known as the federal stimulus
bill). In all, between 2009 and late 2011, $9.8 billion
in cash grants was disbursed under the stimulus bill,
and the vast majority of that money—$7.6 billion—was
received by the wind-energy sector.[77]
Furthermore, an analysis of the 4,256 projects that won
grants from the Treasury Department under section
1603 shows that $3.25 billion in grants went to just
eight companies, all of which are board members of
the American Wind Energy Association (AWEA).[78] Two
foreign companies, the Spanish utility Iberdrola and the
German energy giant E.On, were among the biggest
beneficiaries of the section 1603 grants: Iberdrola, which
has a market capitalization of $39 billion, collected $1
billion in grants; E.On, with a market capitalization of
$49 billion, collected $542.5 million.
The federal government has also provided loan
guarantees for renewable projects. And while the
failure of solar-panel-maker Solyndra—which had
a $529 million loan guarantee from the federal
government—is the most prominent example,
numerous other companies have also garnered
guarantees. One company, New Jersey–based NRG
Energy, along with its partners, has secured some
$5.2 billion in federal loan guarantees to build
solar-energy projects.[79] The production tax credit for
renewable-energy generation has also imposed costs
on taxpayers. In 2007, the EIA estimated that subsidy
was costing $418 million per year.[80]
Perhaps the most controversial example of how
renewable subsidies are being captured by big business
is the $1.9 billion, 845-megawatt Shepherds Flat wind project in Oregon, which is getting the bulk of its
funding from federal taxpayers. And that largesse will
provide a windfall for General Electric and its partners
on the deal, including Google, Sumitomo, and Caithness
Energy. Not only is the Department of Energy giving GE
and its partners a $1.06 billion loan guarantee, but as
soon as GE’s 338 turbines start turning at Shepherds Flat,
the Department of the Treasury will send the project
developers a cash grant of $490 million.[81]
The deal was so lucrative for the project developers
that in 2010, some of President Obama's top advisors,
including energy policy czar Carol Browner and
economic advisor Larry Summers, wrote a memo
saying that the project's backers had "little skin in the
game" while the government would be providing "a
significant subsidy (65+ percent)." The memo went on
to say that the project backers would provide equity
equal to only about 11 percent of the project's cost,
even though they would receive an "estimated return
on equity of 30 percent." That’s a huge return for the
utility sector, which has an average return on equity
of about 7 percent.[82]
The memo also pointed out that the carbon dioxide
reductions associated with the project "would have to
be valued at nearly $130 per ton CO2 for the climate
benefits to equal the subsidies." That per-ton cost,
the memo said, is "more than six times the primary
estimate used by the government in evaluating rules."[83]
Apart from the federal subsidies, renewable projects
have received tax breaks from numerous states.
Advocates of renewable energy often cite Texas
as a model for state policies toward renewables in
general and wind energy in particular. But a 2010
report by the Texas comptroller found that local
jurisdictions in the state are forgoing $712.3 million
in property-tax revenue because of exemptions given
to wind-energy developers.[84] In one case, a company
operating a large wind facility near Roscoe, Texas,
was given exemptions worth $37.2 million over a 13-
year period.[85] The tax revenue forgone by the local
jurisdictions must be made up by other taxpayers. The
property-tax-exemption program was so good for the
wind developers and local jurisdictions that the Texas
legislature effectively ended the program in 2009.[86]
Oregon residents are also paying for the renewable
mandates in lost tax revenue. Using Oregon's
Business Energy Tax Credit, some of America’s
biggest companies have avoided paying tens of
millions of dollars in state income taxes. In 2009, The
Oregonian reported that three companies—Walmart,
Costco, and U.S. Bank—"shelled out a combined
$67 million to avoid paying $97 million in Oregon
income taxes." In 2008, Walmart paid $22.6 million
for the right to claim some $33.6 million in energy tax
credits. The cash was forwarded to several renewable
projects, including a pair of wind farms. In return,
Walmart pocketed the $11 million in tax savings.
But as Oregonian reporter Harry Esteve pointed
out: "The loser in the transaction is Oregon's general
fund—which pays for public schools, prisons and
health care programs—because the state is out the
full $33.6 million in tax revenues."
In 2007, the tax credit was costing Oregon taxpayers
about $10 million.[87] But with numerous corporations
tapping the program, the costs quickly soared, which
forced Oregon legislators to place a cap of $300 million
on the credit for the 2009–11 period. In 2011, with
the state's budget in tatters, the legislature effectively
ended the program by capping it at $3 million.[88]
OTHER FACTORS PUSHING ELECTRIC COSTS UP
Electric rates are driven by numerous factors.
Among the most important factors currently at
play: increasingly stringent federal environmental
rules that are forcing numerous coal-fired power plants
to be retired. For decades, coal-fired generation has
been the cheapest form of electricity production. But
coal's share of the market is shrinking. In July 2011,
the EIA reported that coal's share of the domestic
electricity market had declined to 46 percent, its lowest
level in over 30 years.[89]
Electricity providers are replacing much of their coalfired
generation with natural gas units because the EPA
is pushing regulations like the Cross-State Air Pollution
Rule and the Maximum Achievable Control Technology
requirement. In addition, federal authorities are promulgating new rules on mercury emissions, coal
ash, urban air quality, and cooling water.[90] The EPA has
estimated that the new pollution-control equipment
will cost utilities $10.6 billion by 2016.[91]
Taken together, all the regulations could result in 80,000
megawatts of coal-fired capacity, or about 7 percent of
all generating capacity in the U.S., to be shuttered.[92] In
May 2011, a study by NERA Economic Consulting, which
was commissioned by several coal-dependent utilities,
estimated that if the federal rules are implemented as
scheduled, "average U.S. retail electricity prices in 2016
would increase by about 12 percent."[93]
While the rules would barely affect ratepayers in
California, where coal provides just 1 percent of the
state's electricity, NERA predicts that consumers in
coal-dependent states like Kentucky and Tennessee
could see their electricity bills increase by over 23
percent within five years.[94] And consumers in southern
Michigan, where unemployment rates are among the
highest in the nation, could see their electricity costs
increase by 20 percent.
In addition to the new regulations, many utilities
are installing "smart" meters to their distribution
networks, and those new meters are also contributing
to higher bills. For instance, residential consumers in
the Houston area are getting smart meters for which
they will be paying an additional $3 per month for
the next 12 years.[95]
Expansion of the electricity transmission system is also
contributing to higher costs. According to the Edison
Electric Institute (EEI), a trade group that represents
shareholder-owned electric companies, member
companies spent over $55 billion on transmission
projects between 2001 and 2009. Another $61 billion
will likely be spent on transmission projects from 2010
through 2021.[96] A majority of that money is being spent
to accommodate renewables. EEI says that about $39.5
billion in new transmission investment is being made
on "projects addressing the integration of renewable
resources, and where needed, to accommodate the
expected off-peak production." The cost of the new
transmission lines for renewable-energy projects will
be about $126 for each American.[97]
The cost of lines needed to accommodate renewables
will be borne by consumers. The cost in Texas, which
has more wind-generation capacity (10,135 megawatts)
than any other state,[98] will be $6.79 billion for windenergy
projects, or about $270 for each Texan. The
new transmission capacity will result in charges of $4
to $5 per month per electric customer.[99]
RISING ELECTRICITY PRICES AND THEIR IMPACT ON THE ECONOMY
Residential electricity rates are soaring, and they
are doing so at the worst possible time. Between
2006 and 2010, the rates increased at a pace
faster than inflation. The result: annual electricity costs
for the average homeowner are up by about $300 over
that time period.[100]
The recent surge in rates reverses a decadeslong
trend. In 1960, the inflation-adjusted cost of
residential electricity was $0.14 per kilowatt-hour. By
2005, the average cost of a kilowatt-hour delivered
to residential customers had fallen to $0.09.[101] But by
October 2011, the average cost had surged, to just
over $0.12.[102] The U.S. electricity sector, one of the
biggest industries in the world, posted sales of $369
billion in 2010.[103]
These rising costs are adding a strain to the U.S.
economy at the same time that the country is struggling
with persistently high unemployment and record
levels of food-stamp usage, up 71 percent since 2007.
While there are many reasons for the persistence of
unemployment and the soaring food-stamp rolls,
it's clear that higher-cost electricity hurts the overall
economy as it slows growth and acts as a regressive
tax on the poor and the working class. Between the
beginning of the recession and June 2011, real median
incomes in the U.S. declined by 9.8 percent.[104] That
decline means that higher electricity costs are taking a
larger percentage of disposable income from low- and
middle-income workers.[105]
Although some regulations governing the electricity-generation
sector can be justified on health-related
grounds—with the quest for cleaner air as a frequently cited goal—the push for renewable energy is largely
elective. And that should be a concern, given the
regressive nature of higher electricity prices. In her
2009 report for the Oak Ridge National Laboratory
about the impact of RPS mandates on low-income
consumers, Barbara R. Alexander noted:
The impact of poverty on a household's ability
to afford essential utility services is significant.
Low-income households have an energy burden
(percentage of income that must be spent to keep
the heat and lights on) that has increased from
10% to over 25% for those households in the
lowest quintile by income over the past decade,
reflecting increased prices and essentially flat
income for this group. This contrasts with the
energy burden of moderate-income households,
which is 4% of income on average. Anywhere from
20 to 30% of households in many utility service
territories are "low income." The ability of current
low income bill payment assistance programs-whether funded through taxes or utility rates-to
meet these needs and assure access to affordable
electricity service is well documented to be
insufficient and likely to be even more so due to
the recent economic recession and the downward
trend in employment.[106]
The deleterious effect that higher energy prices are
having on the poor is well documented. In early 2009,
the Wall Street Journal reported "a record number
of U.S. households are seeking state assistance to
pay their heating bills even as fuel prices have eased
recently." The paper said that low-income energyassistance
programs in a dozen states had seen
applications jump by at least 25 percent. In Texas
alone, 150,000 households sought assistance, triple
the number recorded a year earlier. Similar increases
were seen in Florida. The paper reported that the
number of applicants for energy-cost assistance in
California more than doubled. "Other states with big
jumps included Tennessee at 60%, Arkansas at 50%,
Arizona at 35%, Alaska at 34%, New Mexico and
Oregon at 26% and Alabama, Massachusetts and New
Hampshire at 25%."[107]
The upward surge in families needing assistance with
their energy bills continues. In November 2011, the
National Energy Assistance Directors' Association
(NEADA) reported that 8.9 million low-income families
received assistance for energy bills in fiscal year
2011 and "approximately 10 million households are
expected to apply for assistance in FY 2012."[108] The
group reported that 52 percent of the people surveyed
said that "energy bills were more difficult to pay than
in the previous year." In December, the group issued
another report, which found that the number of
military families receiving assistance for their energy
bills had increased by 156 percent since 2008.[109]
The continuing need for energy-related financial
assistance is occurring at the same time that the federal
government is cutting funding for the Low Income
Home Energy Assistance Program (LIHEAP). In fiscal
year 2011, total funding for LIHEAP was about $4.5
billion. By late December 2011, the projected amount
available for fiscal year 2012 was about $2.6 billion.[110]
CONCLUSION
While many factors are contributing to rising
electricity prices, the evidence shows that
renewable-energy mandates are a key
contributor to the upward price pressure. Given the
fragility of the U.S. economy as well as the large
number of Americans who are living in poverty or are
unemployed or underemployed, policymakers at the
state and federal level should:
- Do a thorough financial assessment of the impact
that renewable-energy mandates have had and
will have on electricity prices.
- Perform cost-benefit analyses on renewable-energy
mandates and, in doing so, provide an estimate
of their per-ton cost of carbon-dioxide reduction.
- Where necessary, suspend or eliminate renewable energy
mandates to ensure that electricity is
affordable.
ENDNOTES
1. DSIRE database, http://www.dsireusa.org/summarymaps/index.cfm?ee=1&RE=1.
2. See, e.g., Bill Ritter, Jr., "Advancing Colorado's New Energy Economy," Denver Post, March 11, 2010,
http://www.denverpost.com/opinion/ci_14650410
3. Gov. Edmund G. Brown, Jr., "Governor Brown Signs Legislation to Boost Renewable Energy," April 12, 2011,
http://gov.ca.gov/news.php?id=16974.
4. EPA data, http://www.epa.gov/chp/state-policy/renewable_fs.html.
5. Speech by Suedeen Kelly at Tufts University energy conference, Boston, April 16, 2011. Quotation transcribed by the author.
6. Interview with Newsom by the author, Aspen, Colo., June 30, 2011.
7. Barbara R. Alexander and Energy Economics, Inc., "Renewable Energy Mandates: An Analysis of Promises Made and
Implications for Low Income Customers," Oak Ridge National Laboratory, June 2009,
liheap.ncat.org/dereg/renewables%20and%20low%20income.doc, 4.
8. EIA data, http://www.eia.gov/oiaf/servicerpt/acesa/execsummary.html.
9. David Kreutzer, Karen Campbell, William Beach, Ben Lieberman, and Nicolas Loris, "A Renewable Electricity Standard: What
It Will Really Cost Americans," Heritage Foundation, May 5, 2010,
http://www.heritage.org/research/reports/2010/05/a-renewable-electricity-standard-what-it-will-really-cost-americans.
10. Garance Burke and Jason Dearen, "Analyst: Bills Rising due to Overpriced Renewables," Associated Press, November 12,
2011, http://www.mercurynews.com/breaking-news/ci_19323227.
11. EIA data, http://www.eia.gov/electricity/sales_revenue_price/pdf/table5_a.pdf.
12. Department of Energy, National Renewable Energy Laboratory, "20% Wind Energy by 2030: Increasing Wind Energy's
Contribution to U.S. Electricity Supply," July 2008, http://www.nrel.gov/docs/fy08osti/41869.pdf, 19.
13. EIA data, http://www.eia.gov/oiaf/servicerpt/acesa/execsummary.html.
14. Kreutzer et al., "A Renewable Electricity Standard."
15. Bentek Energy, "The Wind Power Paradox," July 2011, http://www.bentekenergy.com/WindPowerParadox.aspx.
16. Timothy Gardner, "Obama Sets 2035 Clean Electricity Target," Reuters, January 25, 2011,
http://www.reuters.com/article/2011/01/26/us-obama-speech-energy-idUSTRE70O50V20110126.
17. President's State of the Union Address, January 25, 2012,
http://www.nytimes.com/interactive/2012/01/24/us/politics/state-of-the-union-2012-video-transcript.html.
18. EIA, "Analysis of Impacts of a Clean Energy Standard," October 2011, 1,
http://www.eia.gov/analysis/requests/ces_hall/pdf/ces_hall.pdf
19. Ibid., 6.
20. Ibid., 7.
21. Ibid., 12.
22. Robert Bryce, "The High Cost of Wind Energy as a Carbon-Dioxide Reduction Method," October 2011,
http://www.manhattan-institute.org/html/ib_11.htm.
23. Renewable Energy Foundation, "The Probable Cost of UK Renewable Electricity Subsidies, 2002–2030," June 20,
2011, http://www.ref.org.uk/publications/238-the-probable-cost-of-uk-renewable-electricity-subsidies-2002-2030.
24. Ibid. Note that this estimate is derived from the Committee on Climate Change's estimate that the needed renewable
mandates would increase electricity costs by 1.1 to 2.2 pence per kilowatt-hour, a figure that the Renewable Energy
Foundation uses to derive an estimate of "approximately £6.5 billion," or just over $10 billion.
25. Britain's population is 62 million.
26. KPMG, "UK Energy Policy 'Must Be Affordable' in Austere Times," July 20, 2011, http://www.kpmg.com/UK/en/
IssuesAndInsights/ArticlesPublications/NewsReleases/Pages/UK-energy-policy-must-be-affordable.aspx. Full KPMG report,
"Rethinking the Unaffordable: Understanding the True Cost of Green Transition," 2011, http://www.kpmg.com/UK/en/
IssuesAndInsights/ArticlesPublications/Documents/PDF/Market%20Sector/Power_and_Utilities/rethinking-the-unaffordable.pdf.
27. Piers Grimley Evans, "UK Offshore Wind Not 'Affordable' Finds KPMG," November 7, 2011,
http://www.powerengineeringint.com/articles/2011/11/uk-offshore-wind-not-affordable-finds-kmpg.html.
28. Center for Climate and Energy Solutions, http://www.c2es.org/node/6324.
29. EPA data, http://www.epa.gov/chp/state-policy/renewable_fs.html.
30. EIA data, http://205.254.135.7/electricity/monthly/pdf/execsum.pdf.
31. Map from National Renewable Energy Laboratory, http://www.google.com/imgres?imgurl=http://windeis.anl.gov/
guide/maps/images/wherewind800.gif&imgrefurl=http://windeis.anl.gov/guide/maps/map2.html&h=600&w=800&sz=
88&tbnid=7EgacX_86p1iWM:&tbnh=90&tbnw=120&prev=/search%3Fq%3Dus%2Bwind%2Benergy%2Bmap%26t
bm%3Disch%26tbo%3Du&zoom=1&q=us+wind+energy+map&docid=pCmzKULsemcuiM&hl=en&sa=X&ei=bzALT9
HEE6PisQLTz_SRCg&sqi=2&ved=0CGIQ9QEwBQ&dur=426.
32. Governor's Wind Energy Coalition letter, November 15, 2011,
http://governorswindenergycoalition.org/wp-content/uploads/2011/03/GWC-PTC-Letter-Final2-11-15-11.pdf.
33. New Jersey Solar FAQs, http://www.renewablepowerinc.com/nj_faq.html.
34. EIA data, http://205.254.135.7/electricity/annual/pdf/tablees1.pdf.
35. Office of the Auditor General of Ontario, 2011 annual report, Section 3.03, "Electricity Sector—Renewable Energy
Initiatives," http://www.auditor.on.ca/en/reports_en/en11/303en11.pdf, 88.
36. "A Green Energy Act for Ontario," 2009,
http://www.greenenergyact.ca/Storage/23/1460_GEAA_ExecSum_2009_v2print.pdf.
37. Office of the Auditor General of Ontario, news release, December 5, 2011, http://www.auditor.on.ca/en/news_en/11_newsreleases/2011news_3.03.pdf.
38. Ontario.ca, "McGuinty Government Introduces New Measures to Help Ontario Families and Reduce Debt," November
18, 2010, http://news.ontario.ca/mof/en/2010/11/ontario-introduces-electricity-cost-relief.html.
39. Keith Leslie, "Electricity Prices to Rise Again as OPG Seeks 6.2 Per Cent Hike," The Canadian Press, February 22, 2011,
http://www.thestar.com/news/ontario/article/943008--electricity-prices-to-rise-again-as-opg-seeks-6-2-per-cent-hike.
40. Glenn Fox and Parker Gallant, "Ontario's Power Trip: The $4,000 Electricity Bill," Financial Post, October 4, 2011,
http://opinion.financialpost.com/2011/10/04/ontarios-power-trip-the-4000-electricity-bill.
41. Claire Sibonney, "Ontario Watchdog Warns on Green Energy Costs," Reuters, December 5, 2011,
http://news.yahoo.com/ontario-watchdog-warns-green-energy-costs-192959840.html.
42. Ibid.
43. Beacon Hill Institute and Cascade Policy Institute, "Economic Impact of Oregon's Renewable Portfolio Standard,
March 2011, http://cascadepolicy.org/pdf/2011-3-9-RPSreport.pdf, 2. Note that only “small hydroelectric” facilities are
eligible to qualify under the state's renewable mandates.
44. EIA data, http://www.eia.gov/state/state-energy-profiles-analysis.cfm?sid=OR.
45. Pacific Power data, http://www.pacificpower.net/about/cf/qf.html.
46. Ted Sickinger, "Rates Set to Jump for Pacific Power, PGE Customers in January," The Oregonian, December 17, 2010,
http://www.oregonlive.com/business/index.ssf/2010/12/rates_set_to_jump_for_pacific.html.
47. Portland General Electric data, http://investors.portlandgeneral.com/common/mobile/iphone/releasedetail.cfm?Release
ID=620477&CompanyID=POR&mobileid=.
48. Portland General Electric investor presentation, December 8–9, 2011, 15, http://files.shareholder.com/downloads/
POR/1603699276x0x524715/05e20cff-5c08-475d-acd1-97584c8c8899/Goldman%20Sachs%20Presentation%20
12-8-2011.pdf.
49. Ibid., 10.
50. Sickinger, "Rates Set to Jump for Pacific Power."
51. Beacon Hill Institute and Cascade Policy Institute, "Economic Impact of Oregon's Renewable Portfolio Standard," 3.
52. California Public Utilities Commission, "33% Renewables Portfolio Standards: Implementation Analysis Preliminary
Results," June 2009, 4.
53. Ibid.
54. California's population is approximately 36.9 million.
55. Elizabeth McNicoll, Phil Oliff, and Nicholas Johnson, "States Continue to Feel Recessions' Impact," Center on Budget
and Policy Priorities, http://www.cbpp.org/cms/?fa=view&id=711.
56. Bureau of Labor Statistics data, http://www.bls.gov/web/laus/laumstrk.htm.
57. EIA data, http://www.eia.gov/electricity/sales_revenue_price/pdf/table5_a.pdf.
58. Los Angeles Times, "Villaraigosa Celebrates Los Angeles DWP Milestone: 20% of Power from Renewable Sources,"
January 13, 2011, http://latimesblogs.latimes.com/lanow/2011/01/los-angeles-dwp-marks-20-percent-of-power-fromrenewable-
sources.html.
59. Division of Ratepayer Advocates, "Green Rush: Investor-Owned Utilities' Compliance with the Renewables Portfolio
Standard," February 2011, http://www.dra.ca.gov/NR/rdonlyres/0CB0B986-E93B-462A-BA62-804EDAE43B82/0/
RPSReportPublic_FINAL_2011_Feb_14_v2.pdf, 8.
60. EIA data, http://205.254.135.24/oiaf/aeo/electricity_generation.html.
61. Division of Ratepayer Advocates, "DRA Troubled by Continued CPUC Approval of Overpriced Renewable Projects,"
November 10, 2011, http://www.dra.ca.gov/DRA/News/News+Releases/111110_abengoa.htm.
62. Electric Power Research Institute, "Program on Technology Innovation: Integrated Generation Technology Options," June
2011, http://my.epri.com/portal/server.pt?Abstract_id=000000000001022782, 1–11, 12.
63. Ibid., 1–12.
64. EIA data, http://205.254.135.24/oiaf/aeo/electricity_generation.html.
65. EIA data, http://www.eia.gov/oiaf/beck_plantcosts/pdf/updatedplantcosts.pdf, 7, 2–10.
66. Department of Energy, "20% Wind Energy by 2030," 147.
67. EIA data, http://www.eia.gov/oiaf/beck_plantcosts/pdf/updatedplantcosts.pdf, 7.
68. NREL, "Cost and Performance Assumptions for Modeling Electricity Generation Technologies," November 2010,
http://www.nrel.gov/docs/fy11osti/48595.pdf, 96. See also the AEO 2011, with updated capital cost estimates:
http://www.eia.gov/oiaf/beck_plantcosts/index.html. It shows that in one year, overnight costs for onshore wind
increased by 21 percent while offshore wind increased by 50 percent.
69. EIA data, http://www.eia.gov/dnav/ng/hist/rngwhhdA.htm.
70. Bloomberg data, http://www.bloomberg.com/energy/ .
71. Domestic natural gas consumption is about 24 trillion cubic feet per year. See EIA data,
http://www.eia.gov/dnav/ng/hist/n9140us2A.htm.
72. MSNBC, "Morning Joe," January 26, 2011, http://www.msnbc.msn.com/id/3036789/vp/41271645#41271645
73. Rod Walton, "T. Boone Pickens tells Tulsa Rotary Club energy plan will succeed," Tulsa World, February 1, 2012,
http://www.tulsaworld.com/site/printerfriendlystory.aspx?articleid=20120201_49_
E1CUTLIN986616&PrintComments=1
74. Reuters, "Exxon sees gas replacing coal as top US power generator – WSJ," December 8, 2011,
http://af.reuters.com/article/energyOilNews/idAFL3E7N82P820111208
75. Julie Johnsson and Mark Chediak, "Electricity Declines 50 % as Shale Spurs Natural Gas Glut: Energy," Bloomberg,
January 17, 2012,
http://www.bloomberg.com/news/2012-01-17/electricity-declines-50-in-u-s-as-shale-brings-natural-gas-glut-energy.html
76. EIA, "Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2010,"
http://www.eia.gov/analysis/requests/subsidy/pdf/subsidy.pdf, xiii.
77. Treasury Department data, http://www.treasury.gov/initiatives/recovery/Pages/1603.aspx
78. Analysis done by author of Treasury Department data. The eight companies and the amount of their 1603 grants are:
- Iberdrola: $1.07 billion
- NextEra: $618 million
- TerraGen: $467.9 million
- Invenergy: $229.5 million
- Edison Mission: $161.8 million
- NRG: $84.2 million
- Pattern: $80.3 million
- E.On: $542.5 million
See also Robert Bryce, "Why the Wind Industry Is Full of Hot Air and Costing You Big Bucks," FoxNews.com, December
20, 2011, http://www.foxnews.com/opinion/2011/12/20/fossil-fuel-industry-big-business-cashing-in-big-on-renewablesubsidies/
print#ixzz1j4sk44eD. Note that the Fox story says that the nine wind companies collected $3.37 billion. That
figure is incorrect. For AWEA's board membership, see: http://www.awea.org/learnabout/aboutawea/bod.cfm.
79. Eric Lipton and Clifford Krauss, "A Gold Rush of Subsidies in Clean Energy Search," New York Times, November 11,
2011, http://www.nytimes.com/2011/11/12/business/energy-environment/a-cornucopia-of-help-for-renewable-energy.
html?pagewanted=all.
80. EIA data, http://www.eia.gov/analysis/requests/subsidy/pdf/subsidy.pdf, xiv.
81. Russell Gold, "Wind, Sun Power Still Face Hurdles," Wall Street Journal, March 31, 2011,
http://online.wsj.com/article/SB10001424052748703883504576186961618483344.html.
82. Yahoo! finance data, http://biz.yahoo.com/p/sum_qpmd.html.
83. The entire memo can be seen at:
http://media.oregonlive.com/politics_impact/other/Summers_renewable_energy_memo%5B1%5D.pdf.
84. Susan Combs, Texas Comptroller of Public Accounts, "Texas Economic Development Act Report 2010," December
2010, http://www.texasahead.org/tax_programs/chapter313/TEDA2010-96-1359.pdf, 5.
85. Ibid., 88.
86. Morgan Smith, Axel Gerdau, and Ryan Murphy, "Wind Farm Money Fuels Spending in West Texas Schools," Texas
Tribune, November 11, 2011, http://www.texastribune.org/library/multimedia/wind-farm-money-spending-schools.
87. Harry Esteve, "Walmart, Others Make Money on Oregon's Energy Tax Credits," The Oregonian, December 29, 2009,
http://www.oregonlive.com/politics/index.ssf/2009/12/walmart_others_make_money_on_o.html.
88. Ted Sickinger, "Oregon's Largest Solar Project Marks End of Business Tax Credit Era," The Oregonian, August 17,
2011, http://www.oregonlive.com/business/index.ssf/2011/08/oregons_largest_solar_project.html.
89. EIA data, http://www.eia.gov/todayinenergy/detail.cfm?id=2391.
90. Neela Banerjee, "EPA Set to Impose Tough Mercury Limit at Power Plants," Los Angeles Times, December 15, 2011,
http://www.latimes.com/news/nationworld/nation/la-na-epa-mercury-20111216,0,4551991.story.
91. Juliet Eilperin and Steven Mufson, "EPA Finalizes Tough New Rules on Emissions by Power Plants," Washington Post,
December 16, 2010, http://www.washingtonpost.com/national/health-science/epa-finalizes-tough-new-rules-onemissions-
by-power-plants/2011/12/16/gIQAc2WTzO_story.html.
92. Matthew L. Wald, "New Rules and Old Plants May Strain Summer Energy Supplies," New York Times, August 11,
2011, http://www.nytimes.com/2011/08/12/business/energy-environment/new-rules-and-old-plants-may-strainsummer-
energy-supplies.html?pagewanted=all.
93. NERA report, http://www.eenews.net/assets/2011/06/08/document_gw_04.pdf.
94. EIA data, http://www.eia.gov/electricity/state/california and http://www.eia.gov/electricity/state/california/xls/sept05ca.xls.
95. Loren Steffy, "The Hidden Cost of Smart Meters," Houston Chronicle, November 18, 2011,
http://www.chron.com/business/steffy/article/The-hidden-cost-of-smart-meters-2277478.php.
96. Edison Electric Institute, "Transmission Projects: At a Glance," March 2011,
http://www.eei.org/ourissues/ElectricityTransmission/Documents/Trans_Project_lowres.pdf, iii.
97. According to the Census Bureau, the current population of the U.S. is about 312 million.
98. American Wind Energy Association data, http://www.awea.org/learnabout/industry_stats/index.cfm.
99. Kate Galbraith, "Cost of Texas Wind Transmission Lines Nears $7 Billion," Texas Tribune, August 24, 2011,
http://www.texastribune.org/texas-energy/energy/cost-texas-wind-transmission-lines-nears-7-billion.
100. Dennis Cauchon, "Household Electricity Bills Skyrocket," USA Today, December 13, 2011,
http://www.usatoday.com/money/industries/energy/story/2011-12-13/electric-bills/51840042/1?csp=ip.
101. EIA data, http://www.eia.gov/totalenergy/data/annual/pdf/sec8_39.pdf.
102. EIA data, http://www.eia.gov/electricity/monthly/update. Actual total is $0.1212.
103. EIA data, http://www.eia.gov/electricity/annual/pdf/tablees1.pdf.
104. Ron Scherer, "A Long, Steep Drop for Americans' Standard of Living," Christian Science Monitor, October 19, 2011,
http://www.csmonitor.com/layout/set/print/content/view/print/415564.
105. Between 2000 and 2009, inflation-adjusted weekly wages fell, according to the Economic Policy Institute; see Ray
Sanchez, "Will Middle Class America Ever See a Real Raise Again?," ABC News, August 6, 2010,
http://abcnews.go.com/Business/strangling-middle-class-america/story?id=11325933#.TwcenZhkjGs.
106. Alexander and Energy Economics, "Renewable Energy Mandates," 4.
107. Rebecca Smith, "Households Seeking Energy Assistance Soar," Wall Street Journal, January 12, 2009.
108. National Energy Assistance Directors' Association, "National Energy Assistance Survey," November 2011,
http://www.neada.org/news/NEA_Survey_Nov11.pdf.
109. NEADA data, http://www.neada.org/communications/press/Press%20Resease%20-%20NEADA%2012-8-11.pdf.
110. LIHEAP Clearinghouse data, http://liheap.ncat.org/Funding/funding.htm.
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