In 2007, with Bev Perdue as president of the Senate, Joe Hackney as speaker of the House, and Mike Easley as governor, a very liberal, Democratic-run state government imposed a mandate that by 2021, the state’s investor-owned utilities must provide 12.5 percent of their energy from renewable sources or conservation measures.
The legislation, Senate Bill 3, defined renewable sources as solar, wind, and biomass. According to the N.C. Utilities Commission, this amounted to a $310 million cost increase (i.e., tax hike) on North Carolinians.
The law has been in effect for five years. It has not prevented global warning as was originally claimed and it is not creating jobs as is now claimed. It is time to repeal this mandate for high electricity costs. House Bill 298 (and its companion, Senate Bill 365), now moving through the General Assembly, would do just that. This may be the most important piece of legislation this session.
Solar, wind, and biomass offer unreliable and expensive energy. The sun doesn’t always shine, the wind doesn’t always blow, and none of these volatile sources can meet a consistent or peak demand for electricity. Even so, state law mandates that we use renewables and pay higher rates.
Solar power costs twice as much as wind power, three-and-a-half times as much as nuclear, four times the cost of coal, and almost five times the price of natural gas.
North Carolina is the only state in the Southeast that mandates higher electricity costs. Economic studies show that these mandates have negative impact on our economy — almost $2 billion in net costs, 3,592 jobs lost, $46 million in lost disposable income and $61 million in lost investments. A John Locke Foundation study of the mandate found that, when fully implemented in 2021, it would increase North Carolina’s electricity rates $1.8 billion.
In other states with similar mandates, electricity costs increased by an average of 19 percent per household and annual household electricity costs went up by an average of $243 a year. Speaking of other states, 10 have legislation pending to modify or repeal their renewable mandates.
When electricity costs go up, we pay those extra costs three times. We pay as taxpayers. When state government’s electricity bill goes up, taxpayers are left footing the bill. And think of all the government offices, schools, and buildings across the state being heated, cooled, and lighted. Add the stoplights and streetlights as well — that’s a big electric bill! We pay again as a homeowner or renter in our monthly power bills. And we pay a third time as a consumer of goods and services as businesses pass higher electricity costs along to their customers.
Despite claims from the solar energy industry of job creation, mandated higher energy costs are eliminating North Carolina jobs and harming our economy. The solar industry is heavily subsidized courtesy of North Carolina taxpayers, taking money out of the economy and out of our pockets, money that could have been used to expand businesses, hire new workers, or invest in new ideas.
Instead, between 2007 and 2012, more than $72 million in taxpayer money has been spent on subsidizes to the solar industry in tax credits and direct appropriations. A state tax credit of as much as $2.5 million is available per solar project and alternative-energy tax credits from both the state and federal government reduce the cost of solar farm construction by more than half.
The role of government is to ensure that utility companies provide the lowest-cost, most efficient, and most reliable sources of electricity to consumers. It is not to mandate any specific any type of electricity source, no matter what it might be. If these renewable sources are such a great deal, they should stand on their own — without big subsidies or government mandates.
Becki Gray is vice president of outreach for the John Locke Foundation.