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Carolina Journal News Reports

Bill Gutting Renewable Mandate Survives in Senate Committee

Controversial voice vote only part of lively debate

May. 2nd, 2013
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RALEIGH — A contentious Senate committee hearing Wednesday on a bill to phase out multimillion-dollar state tax subsidies to select renewable energy providers came to a raucous close with a disputed voice vote.

“It was extremely disappointing. It offended democracy,” state Sen. Floyd McKissick, D-Durham, said after the Senate Finance Committee passed Senate Bill 365, the Affordable and Reliable Energy Act. Senate leader Phil Berger, R-Rockingham, supports the bill, a companion to House Bill 298, which is stalled in the House Public Utilities and Energy Committee.

“The nays were clearly louder than the yeas, and when there was a request for ‘division,’ which would have allowed for the counting of the yeas and nays by hands, it was ignored,” said McKissick, who opposes the bill. By not granting that request for a hand count, “it looks like you’re simply ignoring the will of the committee.”

The bill would cap state-mandated utility generation of renewable energy at 3 percent of total use, and eliminate the mandate and its subsidies after 2023. Existing state law requires utilities to generate 12.5 percent of their electricity through renewable means by 2021. The House bill would allow the current law to run its course, but kill it after 2021.

“Senator Berger believes it is time to revisit the policy of subsidizing and mandating utilities to purchase alternative energy sources,” Berger spokeswoman Amy Auth told Carolina Journal before the committee meeting.

“He is concerned about the high cost of these subsidies to consumers, many with low or fixed incomes, while executives of subsidized companies walk away with six- and seven-figure salaries,” Auth said.

Berger’s backing of the legislation is in stark contrast to the extended silence of House Speaker Thom Tillis, R-Mecklenburg, on the House version of the bill, and refusal of his staff to answer questions about his position on it. Tillis referred H.B. 298 to four committees for approval, a strong marker that he most likely opposes it.

Senate Republicans appeared nervous about Wednesday’s vote. At one point, Sen. Bob Rucho, R-Mecklenburg, huddled with Sen. Jerry Tillman, R-Randolph, after which Tillman took pencil and paper and canvassed committee members as debate was taking place before an audience that filled every seat in the meeting room.

“We had them by about two or three votes,” Dallas Woodhouse, state director of Americans for Prosperity, a supporter of S.B. 365, said of the voice vote after the meeting.

“This is hard, because as George Bernard Shaw said, ‘The government that robs Peter to pay Paul will always have Paul’s support.’ There’s a lot of Pauls in there, but luckily the committee was representing Peter, who has to pay the bill,” Woodhouse said.

“These are a bunch of subsidized industries who want to keep the subsidies” that are generated by money taken from taxpayers, he said of the several representatives from agricultural companies and trade groups who spoke against the bill.

Sen. Josh Stein, D-Wake, pushed vigorously for defeat of the bill.

“The anti-small business hostility of this legislation is really amazing,” Stein said.

“What we’ve gotten in five years is $1.7 billion invested in North Carolina, 22,000 new jobs in the sustainable energy, clean tech sector, there is hundreds of millions of dollars in investing waiting to happen,” he said. There also are $173 million in savings projected over the 20-year life of the Renewable Energy Portfolio Standards that mandate the utilities’ purchase of renewable energy, he said.

Stein’s numbers come from an RTI/La Capra study prepared for the North Carolina Sustainable Energy Association that represents solar and other renewable energy firms. Economists at Beacon Hill Institute of Suffolk University in Boston have refuted that study.

The Beacon Hill peer-reviewed analysis concluded the RTI/La Capra study results “are mismeasured and spurious. Orthodox cost-benefit analysis will not find anything like what the report's authors estimate.”

Stein’s job creation claim, likewise, is deceiving, Beacon Hill researchers said. The RTI/La Capra study said 21,000 job-years, not jobs, were created. They are not the same.

For example, one job created and lasting five years would be counted as five job years, even though it’s the same, single job over that time span. And a job year could be multiple, short-term, temporary jobs added together to equate to one full-time job for one year.

The Beacon Hill analysis called the RTI/La Capra 21,000 job-years into question, saying “such an analysis betrays sound economics.”

The Beacon Hill analysis also found that most of the savings from the Renewable Energy Portfolio Standards derive from mandated energy-efficiency programs in government buildings and building code mandates, not the use of green energy itself.

But in defending the job creation potential of the renewable mandates, Stein said “a buddy of mine” could lose a pending $25 million deal that would create 500 jobs, and $25 million to $75 million projects later this year because of investor uncertainty over what will happen with the renewable mandates.

“Investors will not get involved as long as we are playing these games,” he said.

“I’m glad that you bring up the interest of your buddy, and the amount of tax credits that he receives from the federal government and state government” to contribute to his financial success, said bill sponsor Andrew Brock, R-Davie. That apparent inference to cronyism drew laughter from bill supporters and a stunned look from Stein.

“What are the long-term effects of those jobs?” Brock asked, saying most would be temporary. He likened the situation to the federal stimulus program and its long list of heavily subsidized renewable energy companies that failed despite the infusion of taxpayer money.

“How many of those, when the stimulus went away, went under? Those jobs are gone because it doesn’t pay for itself,” Brock said. Rather than take taxpayer money out of the private market to prop up a renewable industry with short-term employment, long-term, sustainable jobs are needed to improve North Carolina’s economy, he said.

“Sooner or later you’ve got to put an end point to this. How long do you subsidize? If 2023 is not the right year, then somebody tell me what is the right year,” said Sen. Harry Brown, R-Onslow.

Like other proponents of the bill, Brown noted that green energy companies still would have a decade remaining to take advantage of the tax subsidies and credits and make their products self-sustaining.

“This is the kind of provision that we’re all concerned about because in reality we’re subsidizing an industry that’s had at least six years to try to show that they can at least break even,” Rucho said. “I believe if my numbers are correct, 30 cents on the dollar comes from the federal credit, and then 35 cents from the state credit.”

The bill now moves to the Senate Commerce Committee.

Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.