Consumers soon could be paying massive new taxes for using electricity. Worse, many government officials apparently couldn’t care less about consumers and would rather appease utilities and environmental special interests. Anyone concerned about higher taxes and sensible policy needs to be aware about two critical issues.
First, North Carolina’s Utilities Commission is considering whether to charge a tax to create a “public benefits fund.” The legislature also is considering the tax. The tax would be an add-on fee in addition to rates. Based on the North Carolina State Energy Office’s modest estimations, the tax could be $181 million a year.
If the size of this tax isn’t concern enough, proponents of the tax are trying to hide it by giving it a euphemism, such as a “systems benefits charge” or a “cost recovery mechanism.” The last thing electricity tax proponents want is for the public to know that an unprecedented tax on electricity might soon become law.
The public benefits fund would be used for programs pushed by environmental interests that try to reduce demand for electricity. North Carolina has had these failed demand reduction programs for years.
Proponents apparently assume that consumers lack the intelligence to make choices that are in their own best interests. So, the government would tax electricity consumers and give some consumers their tax dollars back along with the tax dollars of other consumers. To get the money though, consumers have to take actions that the government thinks are the “right” actions, such as buying energy-efficient heat pumps.
Second, the legislature is considering what is called a renewable portfolio standard. This refers to a requirement imposed on utilities to purchase a certain percentage of electricity through renewable sources of energy. Of course, consumers, not the utilities, will pay for the renewable energy even though it will cost more and lead to zero benefits.
The primary sources of renewable energy in North Carolina would be biomass energy and wind energy. Even the Utilities Commission’s report on a renewable portfolio standard admits that biomass has similar environmental problems as conventional sources, such as coal.
Wind energy consists of wind turbines that can be as tall as 400 feet, or about the size of a 40-story building. Wind power, like the wind, is inconsistent. Conditions have to be just right to generate any energy from wind. As a result, it doesn’t replace the need for conventional energy sources, such as coal. North Carolina also is not an ideal state for wind. The only possible places for these turbines are the mountains and the coast.
As of now, the mountains of North Carolina likely are protected from these monstrosities by a law referred to as the Ridge Law. There needs to be immediate action to protect the coast, too. Otherwise, coastal residents could soon be seeing what are called “wind farms” that consist of numerous wind turbines. Imagine walking on the beach and seeing 50 wind turbines the size of skyscrapers that are only one mile offshore. The impact on property values and tourism would be devastating.
It’s hard to see how these ideas are even considered, unless you take into account the current state of N.C. government. For electricity issues, many in government only worry about environmental groups and utilities. They often are thought of as the “stakeholders” on these issues. They forget one key stakeholder, though: consumers.
Electricity consumers are supposed to be represented before the Utilities Commission by a government agency called the Public Staff. To demonstrate how little consumer interests are considered, the Public Staff is pushing for the new tax on consumers.
If the legislature continues to ignore the interests of electricity consumers and the public, new taxes will soon become reality. N.C. policymakers will demonstrate over the next few months whether special interests still run Raleigh. I’d say a new tax on electricity consumers would be a good indication that it’s business as usual.
Daren Bakst is the legal and regulatory policy analyst for the John Locke Foundation.