RALEIGH – Talk about saying what you mean.
Environmental extremists are currently pressuring the state to order North Carolina power utilities to reduce their projections of future energy demand, a reduction that would undercut the utilities’ case for regulatory approval to build new power plants. How do the activists argue that the demand projections too high? They contend that North Carolina wouldn’t need as much electricity generation in the future if we adopted the conservation measures widely employed in states such as California.
What the environmental activists really mean is that North Carolina’s electric rates are too low. But you can understand why they won’t come right out and say so. The public, and thus the politicians in Raleigh who must heed public opinion, would reject their position.
Last year, the North Carolina General Assembly approved Senate Bill 3, a sweeping package of new regulations aimed at replacing 12.5 percent of projected electricity generation from traditional sources by 2021 with a combination of “renewable sources,” such as wind and solar, and conservation. As my John Locke Foundation colleagues argued at the time, even the 12.5 percent standard was way too high if the goal was to achieve benefits greater than the costs.
But, in the minds of environmental extremists, the goal was never to achieve quantifiable net benefits. Theirs is a spiritual goal, not a practical one. They want to change public lifestyles and attitudes to comport with their own preferences for densely packed communities of smaller homes and yards, walkable or bikable commutes, overpriced “fair trade” clothing, and organic produce carried in burlap bags (okay, so I exaggerate, but not much). Given a choice, most North Carolinians won’t be interested. So they are not to be given a choice.
The 12.5 percent standard, it seems, isn’t enough. It won’t preclude Duke and Progress Energy from building new nuclear and coal plants to shoulder the next half-century of electricity demand. Indeed, reports The News & Observer, fearful activists are “in a race against the clock” to force bigger conservation gains before the plants get built and “wipe out any urgency to try other options.” So the new plan is to insist that North Carolina should meet a much-higher standard, like California’s 33 percent.
Here’s where you have to read between the lines to get the true intention. Californians already consume less power per person than Carolinians do. The gap will probably continue to grow. Are Californians more intelligent and more ethical than Carolinians? No. They just have much higher electric rates, which motivates them to consume power in different ways than Carolinians do.
Energy conservation efforts typically require upfront costs that pay for themselves over time in lower power bills. Most are already perfectly legal – weather-stripping, purchasing energy-efficient appliances and windows, turning off unused equipment more dutifully, etc. – and customers already have incentives to employ them when the cost-benefit ratio works out. In California, where electric rates average 50 percent higher than in North Carolina, far more businesses and households have taken the conservation plunge. It makes sense to do so.
The only way that the California experience can be said to relate to North Carolina is if we expect electric rates to soar to California levels. Obviously, the cost of building new power plants will itself be factored into the equation for setting rates. Power bills will likely rise in any event. But the relative price increases are what matters in this debate.
Because the electric utilities have their own formulas for proposing rates to maximize return on investment, they can’t believe that the cost of new generating capacity will push bills up enough to motivate future North Carolinians to conserve instead of consume. Otherwise, the utilities would be knowingly proposing a course that will lead to their own financial ruin, by taking on the cost of plant construction without the expectation that they’ll recoup it in revenues. Believe them to be that stupid if you wish, but don’t expect the rest of us to go along with you.
What the environmental activists envision is a future North Carolina where power bills are so high that demand will flatten or even fall. They view the prospect as utopian. The rest of us view it as dystopian. So they can’t say what they mean.
Hood is president of the John Locke Foundation.