Energy bill generates hidden taxes and little else 

Are you willing to pay higher electricity rates to support renewable energy? If so, you’re one of only about 10,000 people in North Carolina who is.

That’s because the well-publicized N.C. Green Power program has given state residents an ample opportunity to buy power derived from sources such as solar, wind and hog waste. Yet only 10,000 have signed up, or about .01 percent of the population. As a referendum on renewable energy, N.C. Green Power is a pretty clear indication North Carolinians aren’t interested.

Yet legislators are gearing up to force people to buy energy from renewable sources ($10 per month worth, phased in to as much as $30 per month later). So in what has become business-as-usual, the General Assembly is set to introduce yet another hidden tax that, if passed, will mandate that 8-plus million of us buy what we have elected not to buy – expensive energy with negligible environmental benefits.

Senate Bill 3 will require utility companies to get 7.5 percent of their energy from renewable sources and 5 percent via mandatory “efficiency” programs that are costly to implement. La Capra Associates, consultants for the state Utilities Commission, estimates the mandated Renewable Energy Portfolio will cost $310 million a year – which will be passed on to customers.

You won’t find the added cost as a line-item on your bill. Most people won’t even realize they’re paying this hidden tax.

In addition, Senate Bill 3 doesn’t call for a simple target – which would allow utilities to find the best and most cost-effective renewables to purchase. Instead, members of the General Assembly have figured out which renewable sources you’ll be required to buy. That way, politicians can maintain cozy new relationships with special interests who will be happy to help them stay in office in exchange for the business.

Call it green corporate welfare (like the Google and Dell deals, only “green-washed”). Environmental groups will offer their blessings, conferring legitimacy upon what amounts to more deals like the ones we’ve grown accustomed to.

Many renewable energy companies are “zombie” industries. That is, they don’t survive like other companies, but rely on subsidies. State Rep. Pricey Harrison, D-Guilford, claims that “renewable energy creates good jobs. A recent study found that wind and solar production offers 40 percent more jobs per dollar than coal.” But as economist Robert Michaels writes, “It is easy to invent policies that create lots of jobs – just make delivery trucks illegal and create work for human porters. … Hire people to shatter windows in homes and businesses and create a boon in the glass making industry.” Creating jobs like this just means destroying them somewhere else.

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IN THE PROCESS OF CRAFTING THIS LEGISLATION, “STAKEHOLDERS” WERE INVITED TO THE TABLE. Turns out that stakeholders are those who stand to benefit from the arrangement in one way or the other: politicians, special interests and environmental groups. Unfortunately, the most important stakeholder was ignored: the public – specifically residential consumers.

Why are our leaders doing this? Rep. Harrison says it’s “to address climate change.” But even if you believe the climate modelers that man is causing global warming (and not natural changes in the sun’s brightness), every state in the union would have to mandate orders-of-magnitude more than states currently are. And these portfolios would have to be composed mostly of wind or solar power (nuclear is not usually included). But to create enough energy to address current energy needs, you’d have to cover an area the size of Texas with wind farms and solar panels. I’m not sure how good that would be for the environment, but I am sure most people couldn’t afford it.

North Carolina’s comparatively modest portfolio of renewables, while expensive, focuses on wood and agricultural waste, rather than solar, so the effect on carbon emissions will be undetectable.

Conservatives argue we need to “wean” ourselves from foreign oil to keep proceeds from being funneled to terrorists. But the Saudis will be just as happy to take oil money from China and India as from the United States. Weaning like this will only help terrorists by slowing our economy. Meanwhile, all the cheap energy we forgo will find its way to Beijing and New Delhi.

Lower-income families already have trouble paying their bills. If the policy has no measurable environmental benefit, won’t combat terrorism, destroys prosperity, creates “zombie” special interests and flies in the face of our preferences – why is the General Assembly even considering it?

By Max Borders

(Max Borders is a policy analyst at the Civitas Institute in Raleigh.)

The News & Observer

10 July 2007