Opinion: Carolina Journal Opinions

North Carolina Has An Individual Mandate

RALEIGH — Before there was ObamaCare, North Carolina had its own individual mandate. In 2007, the North Carolina General Assembly mandated that electricity customers buy electricity from renewable energy sources such as solar and wind power.

The law requiring this mandate, known as Senate Bill 3, in some ways is even worse than mandating the purchase of health care. At least with the ObamaCare mandate, you actually will receive health insurance.

Under S.B. 3’s energy mandate, North Carolinians will be paying, in part, to receive nothing in return. Since utility companies can buy nearly half of the required renewable energy from outside the state, North Carolinians will be paying an energy tax to subsidize electricity for people in California and other states, but won’t actually receive the electricity themselves.

S.B. 3 is a mandate benefiting the solar and wind industries, not North Carolinians, as can be seen by the requirement to subsidize out-of-state renewable energy companies.

S.B. 3 also is a mandate imposed on North Carolina that harms its already weak economy. Since renewable energy sources are so much more expensive than other sources of electricity, electricity prices are driven up, thereby hurting the financial health of families and businesses.

According to the U.S. Energy Information Administration, new solar power is five times more expensive than new natural gas. New offshore wind power is about 2.5 times more expensive than new natural gas.

Both solar and wind power are unreliable sources of electricity. The sun doesn’t always shine and the wind doesn’t always blow. As a result, these renewable sources have limited value because they can’t meet baseload generation requirements (the constant demand for electricity) nor can they meet peak demand because an electricity grid manager, unless he’s a magician, can’t force the sun to shine on command.

Further, these sources must be backed up by conventional sources of power, such as natural gas, because renewable sources are so unreliable. These limitations are critical to understand because we can’t simply get rid of a coal plant and then expect to replace that plant with wind power. These renewable sources aren’t interchangeable with conventional sources of power.

The Beacon Hill Institute, a prestigious economic institute at Suffolk University, analyzed the impact of S.B. 3’s individual mandate.

BHI’s analysis suggests that S.B. 3 would cut 3,275 jobs by 2014. In other words, over the next three years, these are jobs that North Carolinians would have had, but because of S.B. 3, will never be created.

S.B. 3 will reduce disposable income $44 million by 2014. This is less money that you and your family can enjoy in your daily lives. State economic output, as measured in state Gross Domestic Product, will be $116 million less than it would have been without the mandate.

Even if you support renewable energy, there’s no justification to mandate it. The state shouldn’t mandate any specific type of electricity sources, be it solar or coal. Utility companies should generate electricity using the lowest-cost and most reliable sources of electricity, whatever they may be.

For those who think this bill is designed to address global warming and, specifically, carbon dioxide emissions, it would make sense if the law mandated the use of nuclear power, which doesn’t emit carbon dioxide. However, S.B. 3 doesn’t mandate nuclear power and doesn’t even allow the use of most hydropower, a renewable energy source that has proven to be effective.

Instead, S.B. 3 is a massive mandate and tax increase on North Carolinians that is hurting the state’s economy, all to provide special subsidies to certain special interests within the energy community. If these energy sources were so marketable, there would be no need to create this individual mandate.

The General Assembly should repeal S.B. 3. The recently introduced House Bill 431 would take this much-needed step. Only citizens can make a repeal happen, though. Utility companies, like other special interests, favor S.B. 3 because the law has many “goodies” in it for them. The issue of repealing S.B. 3 is truly a question of whether citizens and the state’s economy are more important than special interests.

Daren Bakst is director of legal and regulatory studies at the John Locke Foundation.