WALKER: Energy Subsidies Fail Consumers In More Ways Than One


Kristen Walker Contributor
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The debt-ceiling agreement passed by both chambers and signed by President Biden is not good for the American public. Aside from plunging the United States further into debt, the bill resuscitated the massive energy subsidies the House had slashed with the Limit, Save, Grow Act less than two months ago. Climate folks are happy; but the average consumer of electricity ought to be concerned.

More wind turbines and solar panels sound harmless. Diversifying energy sources is never a bad idea, especially if it can save money. In reality, energy subsidies are at the expense of millions of households, many of which are living paycheck to paycheck.

Currently there are thirty states with Renewable Portfolio Standards (RPS), where a certain percentage of a state’s electricity is generated from sources designated as renewable. Each state’s goal varies, but some aspire to be one hundred percent renewable in the next decade or two. What we are never told is the hefty price tag attached.

A comprehensive study conducted in 2019 discovered that electricity prices were 11% higher seven years after RPS passage and up to 17% higher after 12 years. The states that have enacted more stringent policies for the most part have much higher electric rates than the national average, while the states without RPS have the lowest. California, with perhaps the most aggressive renewable mandates in the country, saw its rates rise seven times more than the rest of the country in a span of just ten years. These increased rates translate to thousands of dollars per year per household and hundreds of thousands for businesses.

The most substantial costs associated with renewables include integrating them into the grid system, the backup sources needed when the sun doesn’t shine or the wind stops blowing, the considerable transmission capacity required because of their size and distance from the general population, and payments to compensate electricity generators that have reduced utilization or are prematurely closed. All of this, of course, is passed on to consumers.

Those who make the least end up paying the most: The poor use more of their discretionary funds towards higher energy bills while the affluent can absorb the costs.

States with RPS are beholden to their mandates. If a utility has not met its RPS requirement it cannot buy from the lowest-cost energy source; it must purchase more expensive wind or solar power to comply with its mandate, even if an alternative is cheaper. The discovery of shale in 2006, for example, gave states without RPS the windfall benefit of lower rates. Turns out, being locked into one form of energy production over another has harmful unintended consequences.

Federal tax law provides a 30 percent tax credit for all energy produced from wind and solar. This isn’t free money; taxpayers bear the cost.

But higher bills aren’t the only thing consumers need to be concerned about this or any subsequent summer.

The wind and solar installations from state mandates is already straining the electric grid. The North American Electric Reliability Corporation’s 2023 Summer Reliability Assessment warns that “two-thirds of North America is at risk of energy shortfalls this summer during periods of extreme demand.” This is an increase from previous years.

That is not the best news since warmer-than-average conditions are predicted for much of the northern half of the country this summer.

California is an eerie reminder of what happens when an energy grid is strained. Last September, golden state residents were warned of imminent blackouts if they did not turn up their thermostats, refrain from plugging in their electric vehicles, and avoid major appliance usage in the evenings. Apparently, the state learned nothing from the rolling blackouts two years prior. California has repeatedly funneled money to renewables rather than maintaining its grid, and will continue to face power outages with aggressive and short-sighted “green” energy policies. Last year they barely escaped massive blackouts by forcing residents to conserve energy; is this the new normal?

Renewable portfolio standards and energy subsidies are not in the best interest of consumers. There are too many costs attached, with steep price tags and reliability issues. It is time to permanently retire them in the trash heap of well-intentioned ideas with bad outcomes.

Kristen Walker is a policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow us on Twitter @ConsumerPal.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.