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Renewable Electricity Standards Have No Statistically Significant Impact on Rates

Stephen Lacey, Climate Progress
March 06, 2012  |  8 Comments

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There's a thriving cottage industry devoted to debunking Robert Bryce of the Manhattan Institute. Last October, Bryce said be believed a still-unproven experiment with neutrinos called our entire scientific understanding of global warming into question.

Earlier in the summer, he had the audacity to quote economist EF Schumacher’s book “Small is Beautiful” to unleash a factually inaccurate attack on renewables and promote nuclear power. (Ironically, Schumacher called nuclear an “incredible, incomparable, and unique hazard”).

And now, Bryce is claiming that renewable electricity standards (i.e. state targets for renewable generation) have caused state electric rates to increase by 32% from 2001 to 2010, concluding that states should “suspend or eliminate renewable energy mandates to ensure that electricity is affordable.”

This is a continuation of the scary-but-hollow argument that Americans for Tax Reform’s Grover Norquist tried to make last December in Politico.

The argument is as presumptuous and inaccurate as it was back then. And still no official agency backs up the claim that renewable energy targets have caused substantial increases in rates.

As Bryce well knows, most of the states with renewable electricity standards had higher rates even before putting targets in place. And because of the extraordinarily complex range of factors that go into pricing electricity — number of customers, average usage, infrastructure investments, etc — blaming these increases on renewable energy targets is misleading at best and an outright lie at worst.

Upon examining electricity rate data from the U.S. Energy Information Administration spanning the decade from 2000-2010, a Center for American Progress analysis found zero statistically-significant difference in how renewable electricity standards affect changes in rates. In states where we do see rate increases, it is difficult to quantify what impact these standards had compared with the myriad other factors that drive changes.

For example, MIT researchers determined that there were 14 reasons why California’s rates varied from the national average. In Hawaii, which had the highest rate increase, it was imports in oil for electricity generation that caused such a dramatic hike. And in Maryland, a state with the next-largest increase, the impact of deregulation has been the primary factor.

In 2008, the Lawrence Berkeley National Laboratory examined the range of states with renewable energy targets and found a roughly 1% impact on rates. And in a progress report on Michigan’s renewable electricity standard issued last month, state regulators found that renewable energy contracts were coming in 30% lower than contracts for coal: “the cost of energy generated by renewable sources continues to decline and is cheaper than a new coal-fired generation,” concluded regulators.

There is no doubt that we will see rate increases in some areas of the country, particularly those that are highly dependent on coal and have done little to implement renewables. These impacts should not be overlooked. But experience in various states shows — most recently in Michigan — renewables are increasingly cost-competitive with coal, a resource that is only getting more expensive.

To claim that renewables have already driven up rates by double digits is simply not true, and is not backed up by any official analysis.

This story was originally published on Climate Progress and was republished with permission.

8 Comments

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Gerry Wootton
Gerry Wootton
March 7, 2012
We need to deal with the hand waving between wholesale cost and retail price. It's deceptive to suggest a tight coupling when transmission and distribution average approximately 1/3 of the retail price but varies a lot from place to place and the hourly market is distinguished by considerable variability and high spot prices and not a little artificial constraint of supply. On top of that, taxation adds anything from a few percent up to 20% of the end user cost. One can also note that a lot of these arguments assume that there is a single cost of production by producer class which is not true and a single price paid by the end user which is also not true. Some producers have better resources or higher efficiencies than others. Some users get preferred treatment over others. Of course, one can pretend that all of the factors that affect pricing, including market regulation (or lack therof), have no effect. Take an effect -- assign a single cause -- do no real math.
Having said that, the price paid by a user is not an indicator in it's own right. Users that use less may pay less even if the unit price is higher. When there is more than a 2:1 utilization ratio within the continental US, the total retail cost per capita is a much different map of the America. Strikingly, regions that have a better utilization of electricity have a higher per capita GDP and a somewhat negative relationship to retail pricing. Of course, it goes without saying that regions with profligate consumption would be the most hurt by any increase in pricing while their poor productivity in terms of GDP/kWh would make things even worse for them, or, they could clean up their act.
Gerry Wootton
Gerry Wootton
March 7, 2012
The price of everything is going up -- energy just manages to outpace most other commodities.
It's easy to make big numbers out of little things -- my local chicken farmer charges $1.83 for a dozen large eggs but by the end of the year we will have been ripped off by this swine in the amount of $90 based on our current consumption and at least $1000 by 2021. Ye gads.
So coal guys need to spend about $10.6B to upgrade their decrepit equipment over 10 years when their business is taking in over $100B per year .. so sad. Especially sad when you consider that the majority of it will be from the public purse in the form of subsidies and tax concessions. It's easy to make a 0.5% blip in an operating line sound big.
Its also easy to make a big thing out of capital expenditure. Soon I will have to splash out on a replacement for my aging Ford: I blame it entirely on fuel ethanol. From the inside one can see that transmission lines must be replaced at a pretty fair clip and must also be redeveloped when old generators retire and new ones come on line and/or existing ones are upgraded while new customers come on line. This does cost money. In many of the hot markets for retail electricity pricing, the problem isn't even about the generators as the hourly market is, if anything, going down but is mostly about congestion and inefficient distribution. It would seem that there is a lot more data to support rebuilding and upgrading the grid than the arguments against. Or you can falsely pretend that the grid is just fine and will ever be so free of any expense.
On one hand, you might argue that regions with an interest in renewables have more expensive electricity than those that don't except for those pesky outliers that break that rule or alternately that regions with high electricity costs have a greater interest in alternative sources. Or you can pretend that there's a lot of coal to be mined in Delaware.
lawrence elliott
lawrence elliott
March 7, 2012
If one were to pull back the leaves and dig a little deeper in the weeds you will find that Mr Bryce is inextricably entwined in the massive root system that is 'The Conservative Cult'

When Hillary Clinton famously stated that she felt there was "a vast right wing conspiracy" formed to destroy her husband,the president, she was not paranoid or delusional.

How dare he not join the cult,therefore becoming a heretic deserving of shunning and ridicule at best and maybe beheading at worst?

Clinton only appeared in their Cathedral of CONservatism occasionally and was stingy in depositing anything in the collection plate.He refused to chant and pray and wear the proper garments. Therefore he had to be destroyed.

No different when discussing renewable energy issues and how they relate to the CON's.

Don't be fooled. When you hear someone proudly tell you he or she is " A CONservative" they are either one of the many fools and obedient servants of those who also pull Mr Bryce's strings or they in fact just have a death wish for what is left of this experiment we call Democracy.

Limbaugh,the high priest of the CON's does not criticize the Chevy Volt,the silly solar panels,the hippy organic food or those who demand an end to war because he has thought long and hard and come to a revelation.

He does it as part of his obsession with the CULT.

Mr Bryce in his denigration of renewable energy and his love for nukes and natural gas also doesn't come to that from allot of thinking and logic.
Knowingly or unknowingly he has just become a part of the power struggle between those who own and profit from the present paradigm that is killing all of us and those of us attempting to apply the brakes and negotiate at least a shallow curve (to the left if that floats your boat)in an attempt to avoid the deep canyon strewn with rocks we all know is ahead of us.

Embrace the thinking process and have a fighting chance or embrace 'conservatism' and perish.
lawrence elliott
lawrence elliott
March 7, 2012
@anonymous..... (reason is obvious)

WOW!

Just how long did it take you to 'compose' all of that?

'If any of you have any further questions ask God who is in his own form not human.'

Again

WOW!
lawrence elliott
lawrence elliott
March 7, 2012
I invite anyone to read POWER HUNGRY (if you enjoy substituting spreadsheets and charts for a good bedtime novel)where this author organized into an unreadable assemblage, words that support the old saying that "liars can figure and figures can lie".

Besides the fact that the book is boring and plodding,as you would expect in a not well thought out argument put to paper, it also unknowingly preaches economic and environmental suicide.

The book appears to be a gushing and blushing valentine he's sent to his 'nuclear and natural gas lover'. I think if he could marry a gas well or nuclear reactor vessel he would do it.Probably with the likes of Dick Cheney or other energy pervert as best man.

In our quest to transition over the next few decades into a more sane and well thought out energy paradigm there is that giant 9000 lb elephant in the room we ignore at our peril.

That elephant is the real danger that we continue to think that this unsustainable and uneconomic energy reality we have been in since Edison built the first central station on Pearl Street in lower Manhattan in the 19th century can and should be continued.

The vast majority of our current environmental and even social problems can be directly coupled to our obsession with the 'cheap' and abundant energy we have been wasting and wallowing in for over a century.

Mr Bryce's 'solutions' not only evangelize for more of the same but he calls on all of us to abandon the only sources and uses of energy that will allow us to live a 'livable' life into the 21st century and beyond.

The complexity of that which I speak requires an explanation far more detailed than I can convey in this simple post.

The 'solution' that Mr Bryce espouses in all of his writings has no place in any serious debate over our energy future.


Would you have any faith in a nutritionists knowledge if he or she preached that the solution for obesity was to eat more Twinkies and learn to hate Broccoli
ANONYMOUS
March 7, 2012
I am going to take renewable federal government and fossil out of of the arguments and substitue God and alternative energy choices and climate control all designed by God in the beginning in nature managed by man on a state and regional level designed by God before nations and governments existed.

If any of you have any further questions ask God who is in his own form not human.
Neil Hollow
Neil Hollow
March 7, 2012
We have the same problem this side of the pond. Even the BBC joined in and was forced to issue a retraction.

http://www.solarpowerportal.co.uk/blogs/are_green_measures_really_making_energy_bills_rise_2356/
http://news.bbc.co.uk/panorama/hi/front_page/newsid_9691000/9691095.stm

with a bit of background here

http://liberalconspiracy.org/2012/02/07/bbc-panorma-u-turns-on-green-energy-claims/

Fact my gas bill went up 30% last year. Fact the UK generates 40% of its electricity from gas power station with more being built.
Thomas M
Thomas M
March 6, 2012
Maybe part of the rate hikes are those associated with the "smart grid" which is promoted as part of the renewable energy inclusion into the grid. Smart grid technology seems more like control of the grid of who gets what and when rather than a grid that can include many different types of generated power. Thus another deception to downplay renewables.

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Stephen Lacey

Stephen Lacey

I am a reporter with ClimateProgress.org, a blog published by the Center for American Progress. I am former editor and producer for RenewableEnergyWorld.com, where I contributed stories and hosted the Inside Renewable Energy Podcast. Keep...
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