by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
New research from the Edison Electric Institute by Emma Nicholson and Michael Kagan of Concentric Energy Advisors shows that electricity consumers are getting overcharged by billions of dollars for solar and wind power from PURPA qualifying facilities (QFs) as compared with competitive market rates for solar and wind power. This study uses proprietary data from utilities to compare solar to solar and wind to wind.
Utilities are required by PURPA (the Public Utility Regulatory Policies Act of 1978) to buy any and all power generated by qualifying solar and wind facilities in their areas, without any regard to whether the utility has need of the power at the moment. This law makes electricity utilities buy overpriced electricity they don’t need, and those costs are passed directly to the consumer.
These graphs from the report show how the “avoided-cost” rates awarded the PURPA QFs generally far outstrip the competitive market rates won by other facilities providing energy from the same source (solar or wind):
They conclude: “Accounting for the full term of the solar and wind QF contracts raises the total overpayment estimate to between $2.7 billion and $3.9 billion, respectively.”
But look again: you can also see a decline in costs to provide solar and wind power over time. This should be good news for consumers, but there’s a catch. Look back at those higher QF rates and realize another thing: where those contract rates are fixed, and the contracts last for several years, consumers will continue to be forced to pay those super high rates even as the actual cost of generating the electricity has been falling.
North Carolinians are really stuck because we have:
Let’s not forget that Gov. Cooper “improperly used the influence and authority of his Office” to pressure Duke Energy into contracting with 240 solar companies under the older, higher-rate, 15-year contracts. Those companies otherwise would have been subject to competitive bidding. Instead, we’ll be overpaying them more and more through the year 2033.