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New Report Says Energy Mandates Will Cost RI $150M by 2020

Wednesday, February 05, 2014

 

Do renewable energy mandates help or hurt the Rhode Island economy? A new report points to the latter -- but now without strong opposition.

A new report issued today says that Rhode Island's "struggling economy will further shed hundreds of jobs and waste hundreds of millions of dollars if existing renewable energy standards (RES), mandated by law, are not rolled-back or repealed."

"The Economic Impact of Rhode Island's Renewable Energy Standard: How Energy Mandates Harm the Economy," published by the Rhode Island Center for Freedom and Prosperity in cooperation with the Beacon Hill Institute in Massachusetts, projects that current energy mandates will raise the cost of electricity by almost $150 million for the state's consumers through 2020 -- and RI's electricity prices will unnecessarily rise by an additional 1.85% by 2020.

Read the Report HERE

"These energy mandates are yet another way that we have artificially increased the cost of living and conducting business in our state, resulting in fewer jobs and lower disposable incomes for families," said Mike Stenhouse, CEO for the nonprofit Center. "With no definable benefit, our economy is not strong enough to absorb this added drag. We all must face the new energy reality; therefore our Center recommends immediate repeal," referring to the state's Renewable Energy Standards enacted in 2004.

However, those in the renewable energy community question the efforts to repeal state mandates -- and point to their success to date. "There have been other efforts in recent years," said Kevin Haley with the American Council on Renewable Energy (ACORE). "We saw repeal movements in 15 states, from North Carolina to Minnesota, to Ohio, to Kansas, -- none of those efforts succeeded. This has been going on for several years."

Haley continued, "There has been very little discussion on economic benefits from those opposed. Groups say that renewable energy mandates are bad, but they don't point to the benefits -- and jobs created."  Haley said the projected estimate for implementation of renewable standards would be around $17 million for Rhode Island.  

Study Points to Costs

The preface of the report released today states, "In 2004, the State of Rhode Island enacted Renewable Energy Standards (RES) through legislation known as the Clean Energy Act. Many of the assumptions used to justify the Act turned out to be largely inaccurate, and implementation of its mandates will exact more costs to the Rhode Island economy, with only limited benefits, if any."

"Few policies can be more harmful to a state's overall competitiveness than decisions to increase the cost of energy, particularly to commercial and industrial users," said Paul Bachman, one of the study's authors. "The RI RES will do little to improve the environment and much to convince manufacturers that the state is not welcoming to business expansion. By 2020 the costs of subsidizing green energy will be approximately $1,330 per industrial user."

The report goes on to state that there are a number of "strong arguments to suggest that most of the assumptions that were used as a basis for the energy mandates imposed in Rhode Island were off the mark," including projections that "renewable energy would be more cost-efficient; renewable energy could be abundantly plentiful, fossil fuels would become increasingly expensive, fossil fuels could become scarce in the near future, renewable energy would spur a boom in green jobs, renewable energy is better for the environment, and global warming is an immediate danger" -- all of which the report says are assumptions "openly in dispute."

"If the General Assembly is willing to consider reform of existing RES laws, our Center recommends [that it] enact the Electricity Freedom Act, repealing the state’s renewable energy standards, and require that the state investigate and utilize methods of predicting and tracing the economic effects of renewable energy standards on Rhode Island, prior to renewed implementation," writes the Center in the Report.

Recently, the Rhode Island Public Utilities Commission voted to keep the percentage of renewable energy level for coming year.

"Every 5 years, the Commission is asked to determine whether there are sufficient RECs to allow for the increase in percentage of new renewable resources to go ahead according to schedule," said Thomas Kogut with the RIDPUC

"This past December, there was a split vote -- two to one -- to vote to hold off for a year, which marked the first time since the standards that there was a hold. While the law allowed for an increase of 1.5%, the target percentage will remain at 8.5% for the next year."

ACORE's Haley thought the move could be a prudent one by Rhode Island. "If they held constant at the current percent, tthere are very few standards that are radical. It benefits states to determine what's best for them. It could have been where they're at right now is a good place for the state." The goal of RI's renewable energy portfolio standard is to be at 16% by 2019.

Proponents of Renewable Energy Standards -- and Opponents

The debate over renewable energy mandates continues, and the question of costs to consumers is front and center.

"I've looked at the report, we're familiar with Beacon Hill, they've been around a while", said Peter Rothstein, President of the New England Clean Energy Council. "They pick and choose a handful of data points. For instance, energy costs have been high in our region for several generations, we're at the end of the distribution system and pipeline for gas, for oil."

"What this report doesn't talk about is that energy bills have been coming down faster than the national average, due to natural gas, and efficiency, and the cost of renewable energy coming down faster than expected, continued Rothstein. "No one says solar is the least expensive, but it's come down 50% from where it was. The markets are driving competition, innovation and on a path to become even more cost effective."

"The other piece of our policy is to produce energy in our region -- we've always had to import those resources, now we're keeping more of those dollars here. Creating more jobs here -- I think they ignored that in their analysis," said Rothstein, who added, "We're 45% below where we targeted for greenhouse reductions for 2014."

The report released today by the Center for Freedom and Prosperity and Beacon Hill Institiute acknowledges the proponents of RES laws, but counters the benefits don't outweigh costs

"Lost amidst the claims of increased investment and jobs in the “green energy sector” is a discussion of the opportunity costs of RES policies. By mandating that electricity be produced from more expensive sources, the state government forces local ratepayers to experience higher electricity prices. This means that every business and manufacturer in the state will have higher costs, leading to less investment in both capital and labor. Moreover, every household will have less money to spend on things from groceries to entertainment.

"Proponents of RES laws are correct: There will be more investment and jobs in the “green energy sector,” but rarely do they mention the loss of jobs and investment in every other sector. The methodology in this paper took all of the state into account, resulting in a very likely outcome of fewer jobs and lower investment for Rhode Island," concludes the report.  

 

Related Slideshow: Best and Worst Run States in New England

How well do the New England states stack up against each other in terms of how they're currently run?

According to Wall Street 24/7, looking at a state's debt per capita, budget deficit, unemployment, median household income, and percentage below the poverty line are all indicators of a state's level operational success - or lack thereof.  

Below are how the New England states were ranked compared to each other, based on data from 2012 -- as well as the "best run" and "worst run" states in the country. 

Prev Next

#6

Rhode Island

National Rank, #47

> Debt per capita: $8,721 (3rd highest)
> Budget deficit: 6.9% (35th largest)
> Unemployment: 10.4% (3rd highest)
> Median household income: $54,554 (18th highest)
> Percent below poverty line: 13.7% (tied-20th lowest)

 

Prev Next

#5

Connecticut

National Rank, #41

> Debt per capita: $8,531 (4th highest)
> Budget deficit: 17.1% (12th largest)
> Unemployment: 8.4% (tied-14th highest)
> Median household income: $67,276 (4th highest)
> Percent below poverty line: 10.7% (4th lowest)

 

Prev Next

#4

Maine

National Rank, #30

> Debt per capita: $4,447 (12th highest)
> Budget deficit: 16.6% (14th largest)
> Unemployment: 7.3% (tied-22nd highest)
> Median household income: $46,709 (16th lowest)
> Percent below poverty line: 14.7% (tied-24th lowest)

 

Prev Next

#3

New Hampshire

National Rank, #25

> Debt per capita: $6,414 (8th highest)
> Budget deficit: 20.0% (8th largest)
> Unemployment: 5.5% (8th lowest)
> Median household income: $63,280 (7th highest)
> Percent below poverty line: 10.0% (the lowest)

 

Prev Next

#2

Massachusetts

National Rank, #18

> Debt per capita: $6,414 (8th highest)
> Budget deficit: 20.0% (8th largest)
> Unemployment: 5.5% (8th lowest)
> Median household income: $63,280 (7th highest)
> Percent below poverty line: 10.0% (the lowest)

 

Prev Next

#1

Vermont

National Rank, #6

> Debt per capita: $6,414 (8th highest)
> Budget deficit: 20.0% (8th largest)
> Unemployment: 5.5% (8th lowest)
> Median household income: $63,280 (7th highest)
> Percent below poverty line: 10.0% (the lowest)

 

Prev Next

Worst Run State in US

50. California

> Debt per capita: $3,990 (20th highest)
> Budget deficit: 27.8% (3rd largest)
> Unemployment: 10.5% (2nd highest)
> Median household income: $58,328 (11th highest)
> Pct. below poverty line: 17.0% (18th highest)

 

Prev Next

Best Run State in US

1. North Dakota

> Debt per capita: $3,033 (20th lowest)
> Budget deficit: None
> Unemployment: 3.1% (the lowest)
> Median household income: $53,585 (19th highest)
> Pct. below poverty line: 11.2% (6th lowest)

 

 
 

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Comments:

When historians write the book titled 'How America Lost its Mind, Soul, Wealth, Liberty and then Destroyed Itself', the communist inspired fad called 'green energy' will occupy several chapters.

Renewable Energy? We have it. It's called oil, natural gas, coal, and nuclear.

One would be tempted to mention hydro power, but the eco-red wrench-throwers are busy little termites these days, tearing down all the dams because they're 'unnatural'.

These people wouldn't know 'natural' if it jumped up out the toilet, bit them on their big, fat, behinds.

The purpose of 'green energy' is to destroy energy systems which work, in order to enslave people to dysfunctional contrivances which will cost them their wealth, liberty, and lives.

Comment #1 by paul zecchino on 2014 02 05

good Paul!

Comment #2 by LENNY BRUCE on 2014 02 05

Is Paul's comment which is only silly insults and no facts intended to drive reasonable people off the golocal site? If so, that strategy is working because most people genuinely interested in the dilemma of how to keep energy prices reasonable while building a cleaner energy future using local resources on track have given up on hopes for a reasonable discussion here due to such comments.

Comment #3 by barry schiller on 2014 02 05

More pathetic postings masquerading as science. A cookie cutter study --disowned by Suffolk-- and blathering from Stenhouse. Both funded by oil/coal billionaire Koch brothers.

Comment #4 by Real Clear on 2014 02 06

$150 million?....pffff..chump change...where do I send my check?....don't drop it though....might bounce right out the door, roll down the street and run smack dab into one of them windmills.....sorry!

Comment #5 by Odd Job on 2014 02 06

Perhaps Paul's Language was a little too strong for Barry: Let me put it simply; WE NEED JOBS! p.s. the next time Barry uses facts will be the first time Barry uses facts

Comment #6 by joe pregiato on 2014 02 06

The Koch Brothers? That is so last-year's ThinkProgress talking point, isn't it?

Mr. Schiller -

Surely those who post here would welcome any facts you care to contribute, to augment your usual condescendions, deflections and regressed insults.

If you've an idea as to how to make solar and wind competitive with and as reliable as oil, gas, coal, hydro, and nuclear power plants, please and by all means present them here. You'll become an instant trillionaire.


Solar and wind were popular gimmicks during Mr. Peanuts' "Carter Glory Years". Some people threw money at them for the tax credits. When Mr. Peanuts was broomed from office, solar and wind schemes collapsed because their sole worth lay in the tax break which others of course had to absorb.

If solar and wind were viable, they'd have prevailed long ago in the free market. But they're are not viable so they did not prevail. This is not some big, bad, plot on part of the evil Koch Brothers and nasty Big Oil, it's simple free enterprise. This is reality.

Twenty years ago Narragansett Electric led the way in conserving energy, keeping rates low, and cutting emissions. The company removed gas-fired steam generators (boilers) from Manchester Street Generating Station but kept the three fifty or so Megawatt electric generators which had reliably spun since the '40s.


The company installed three jet engines, same as you find on commercial jet aircraft. They each spin three new electric generators. Rather than dump hot exhaust gases up the stack and waste heat energy, it's ducted thru three new boilers which generate steam. These power the three existing generators.

This tripled plant output and greatly reduced emissions. As Manchester Street was an existing plant, licensing was greatly simplified and there was no need for brownfield issues which would have cost you and other customers plenty, and produced not one milliwatt.

Solar and wind, when rounded to the nearest signifigant figure, produce zero, that's zero with a z, percent of our electrical energy.

Solar and wind are at best intermittent, sporadic, dilute, costly, and energy-intensive.

When you devise ways past those realities and revise the laws of thermodynamics to suit your energy superstitions, you'll own the world.

Comment #7 by paul zecchino on 2014 02 07

PS -

Correction, according to available reports, the co-generation repowering of Manchester Street did not triple plant electrical output. It more than tripled it from about 135 to 489 Megawatts.

Comment #8 by paul zecchino on 2014 02 07




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