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Energy policy

It has been long-standing policy that energy should be both low-cost and reliable. After all, energy is the lifeblood of our economy. Energy is an input into every good or service.

Unfortunately, in 2007, the North Carolina legislature passed legislation, Senate Bill 3 (SB3), that would knowingly drive up electricity prices. The bill mandated that utility companies purchase 7.5 percent of their electricity from renewable energy sources, such as solar and wind power. The extra costs, not surprisingly, are passed on to customers.

Key Facts

• Under SB3, utility companies can meet 40 percent of the renewable energy mandate by buying electricity from outside the state, even though the electricity never comes back to North Carolina. In other words, North Carolinians pay extra for electricity to subsidize the electricity produced and delivered in states like Texas and California.
• "Renewable energy" is an arbitrary term with an arbitrary meaning. The obvious point of SB3 is to reduce carbon dioxide (CO2); however, the definition of "renewable energy" includes neither nuclear energy nor even most hydropower.
• The "allowable" energy sources are filled with significant problems, not least of which is the high cost of wind, solar, and biomass (see the graph below).
• North Carolina has poor wind resources. The only feasible locations for wind power in this state would be in the mountains or along the coast.
• Some environmental extremists want to create for wind power a special exception to the state's Ridge Law, which prohibits the construction of tall structures along the mountain ridgelines. The law would still prohibit modest privately funded buildings that would create jobs and help the economy, but electricity customers would be forced to pay for the placement of costly, unreliable, and massive (500 feet tall) industrial wind turbines along mountain ridgelines.
• If offshore wind turbines were constructed, not only would the massive structures be visible from the coast, but also customers would have to pay an excessive amount for electricity (much more even in comparison with the costs of onshore wind power).
• Wind power is intermittent and unreliable because the wind does not blow all the time. As a result, wind is not a source for baseload generation (the electricity generation needed for ongoing demand). Also, since wind cannot blow on cue, it is not a means for meeting peak demand.

Recommendation

1. Repeal SB3. A bill that artificially creates higher electricity prices hurts the economy and hurts families. Those who suffer the most are the poor. Individuals with lower incomes spend a greater share of their personal budgets on energy compared with groups at higher income levels. SB3 drives up electricity prices, creates a less reliable electricity system, and has no benefits.
   
   If renewable energy sources, such as wind, solar, and biomass, were viable low-cost options, then utility companies would use them. Instead, these energy sources are so inadequate that the legislature had to pass a bill to force people to buy renewable energy.
   
   SB3 primarily serves as a way to mandate a guaranteed market for renewable energy providers, because otherwise people would avoid their cost-prohibitive and unreliable electricity.