(Cross Posted on EnvironmentNC) 

On Tuesday night, the U.S. House passed its energy bill (H.R. 6899).  There are many problems with the bill. The Institute for Energy Research has done a nice analysis. Here are a couple of issues:

1) Offshore Drilling

The bill would allow offshore drilling along the Outer Continental
Shelf (OCS) with a big catch. New offshore drilling is prohibited less
than 50 miles from the coast.

Areas with the most potential for oil and natural gas discoveries
are between the coast and 50 miles. For North Carolina, the area widely
regarded as having the best potential is called the Manteo Unit, which
is about 45 miles offshore. This also means NC?s best chance to share
in a lot of revenues from drilling will be lost.

The House legislation is an offshore drilling bill without the drilling.

2) Creates a federal renewable portfolio standard

Electricity providers (not including state or local governments)
would have to generate 15 percent of their electricity from renewable
sources. Some of this percentage could be offset by gains in energy
efficiency?in other words, energy use reduction that utilities allege
they achieved because of some type of measure they implemented, such as
incentives to customers to buy more energy efficient appliances.

– A renewable energy source doesn?t include hydropower?why? Because
the enviros don?t like hydro even though it is a renewable energy
source?it is a legitimate source of electricity, so therefore it
doesn?t qualify. This exclusion by itself tells you that the House
legislation is an envionmental extremist special interest bill.

– Congress, home of the biggest windbags in the world (I wonder if
it would qualify as a renewable source of energy?), again thinks it can
place a one-size fits all federal policy on what inherently is best
left to the states.

There is a reason why southeastern states, except for NC, don?t have
renewable portfolio standards. We don?t have the same types of
renewable resources as other areas of the country.

The following comes from a letter sent to Congress more than a year ago about a potential federal RPS. The letter is from the Southeastern Association of Regulatory Utility Commissioners, the State of North Carolina, and eight other states:

The reality is that not all states are fortunate enough
to have abundant traditional renewable energy resources, such as wind ?
this is especially true in the Southeast and large parts of the Midwest.

Because of the limited availability and cost-effectiveness of
traditional renewable energy resources, we are deeply concerned that
our utilities will be forced to buy renewable energy credits from the
federal government. Correspondingly, our retail electricity consumers
will end up paying higher electricity prices, with nothing to show for
it.

A mandate to buy renewable energy exists because utilities wouldn?t
otherwise buy this energy?the reason is simple. Renewable sources such
as wind and solar are unreliable and costly. Many states, including NC,
have programs for the public to voluntarily support renewable
energy?the ?problem? is a miniscule number of people do support these
programs.

As a result, the government must force utilities to buy expensive
and unreliable electricity. BTW: The extra costs get passed on to
electricity consumers (including the poor). This is a great deal for
renewable energy providers.

Imagine if you owned a ?widget? business and nobody bought your
widgets. Instead of figuring out ways to make your widget better, or
investing elsewhere, the government mandates that people buy your
widgets. Your widgets can be lousy, but why should you care? You now
have a guaranteed market, which is great for you, and bad for everyone
else.

There is little incentive to make the widgets better (i.e. solar,
wind, etc) and certainly no incentive to stop investing in your bad
widgets and instead invest in something else (i.e. an alternative form
of energy that actually is helpful).

At least with subsidies, renewable energy providers have to worry
whether the subsidies will still be around. An RPS is unlikely to be
repealed?it is much easier to argue against a subsidy and big spending
than some confusing mandate and hidden tax on consumers.

– Energy efficiency programs are basically a government mandate that
exists because legislators think the public has to be forced to buy
energy efficient goods.

As a practical matter, these programs discourage individuals to
purchase energy efficient goods on their own (because individuals will
just wait for whatever incentive is offered), these programs divert
consumers from making more beneficial energy efficient purchases
(again, consumers will just take advantage of what is being offered),
and there is simply no way to know whether the utilities are the reason
why energy use is lower than it otherwise would have been because of
these programs.

To top it off, these programs create higher prices for consumers in
their electricity bills (a hidden fee is charged). This fee helps to
subsidize the incentives and the efficiency programs. Since the poor
are unlkely to be able to take advantage of these programs, they pay
more yet receive nothing in return. It becomes a wealth transfer from
the poor to the wealthy.

To learn more about NC?s RPS, click here and here.

To read a new paper on NC?s energy efficiency programs, click here.