by Jon Sanders
Research Editor and Senior Fellow, Regulatory Studies, John Locke Foundation
• In 2007, the General Assembly passed major energy legislation, SB 3, that would deliberately raise electricity prices in North Carolina through a Renewable Energy and Energy Efficiency Portfolio Standard (RPS).
• The RPS mandate fails to meet its stated purposes, worsening consumers’ energy needs with higher prices, undercutting ‘energy security’ and indigenous energy by incentivizing subsidies to out-of-state energy providers while not counting shale gas, harming energy investment, and making questionable choices for air quality.
• The RPS mandate does, however, contribute to higher electricity prices for captive ratepayers.
• Because electricity is a basic necessity, higher rates are highly regressive. Households with annual incomes of $30,000 per year or less spend as much as one-third of their after-tax income on power bills.
• Economists at Beacon Hill Institute estimated that SB 3 will impose net costs on North Carolina in lost jobs, investment, income, and revenues.
• Instead of developing reliable, efficient, and least-cost sources of electricity, North Carolina’s RPS mandate makes utilities chase arbitrary percentages of handpicked “winner” sources, include some that are extraordinarily inefficient. Solar and wind are exorbitantly expensive, dwarfing conventional sources.
• Renewable energy sources also require vastly larger amounts of land to produce power equivalent to conventional sources. To produce 1,000 megawatts, wind power would require more land than the cities of Raleigh, Wilmington, and Fayetteville combined.
• Since the REPS mandate was passed, the energy world has witnessed a revolution in extracting oil and natural gas from shale rock formations. This game-changer cannot be ignored.
• Furthermore, wind and solar require far, far higher amounts of federal subsidies and land to produce equivalent amounts of power as natural gas.
• SB 3 should be repealed. A bill before the General Assembly would cap and end the RPS mandate. Ideally, the renewable energy and energy efficiency portfolio standard would be eliminated, and the measure’s Construction Work In Progress section would be struck out. North Carolina policy should support lowest-cost, reliable, and efficient energy sources, which one day could include renewables.