Green energy advocates characterize it as a jobs-killing bill, and the House leadership hasn’t made it easy for the measure to move forward, but state Rep. Mike Hager said support is building for House Bill 298, his effort to end costly state tax subsidies for renewable energy.
“I don’t see it as a very complicated issue. Either folks are OK with subsidies or not,” said Hager, a Rutherford County Republican and primary sponsor of H.B. 298. “We’re paying for a Rolls Royce and we’re getting a Yugo.”
Conventional wisdom is that referring a bill to more than one committee signals lack of support from the leadership. That imposes hurdles that can bog down the bill and prevent a floor vote.
Hager’s bill, introduced last week, has been assigned to four committees — Commerce, Regulatory Reform, Environment, and Public Utilities and Energy.
Phone calls and emails to the office of House Speaker Thom Tillis, R-Mecklenburg, seeking comment on Hager’s bill were not returned.
Hager said his bill is a direct response to Senate Bill 3, enacted in 2007. That law mandates implementation of a statewide renewable portfolio standard requiring power companies to purchase solar, wind, biomass products, swine, and poultry waste.
Hager said S.B. 3 hits North Carolina residents with a triple whammy. Most obvious is a higher power bill paid by homeowners, he said. Utility companies simply pass along the higher renewable energy costs to consumers.
But state residents also pay more as taxpayers because of increased costs to power city, county, and state buildings. And they pay more for every product purchase “because every business has that (renewable energy cost) embedded into their product cost now,” Hager said.
Nailing down hard numbers on how much implementation of S.B. 3 has cost the state has been elusive, Hager said.
But based on the fiscal note — a financial impact analysis attached to spending legislation — “My calculations show from 2008 to 2012 we spent about $260 million,” Hager said. And the cost for higher electric bills for city, county, and state buildings is $50 million, he said.
Gov. Pat McCrory has not weighed in on Hager’s legislation. “The governor is going to monitor the bill as it makes its way through the legislative process,” said Crystal Feldman, McCrory’s director of communications. “The governor wants to employ all forms of energy, but right now we’re not going to comment on the specifics of the bill.”
The North Carolina Sustainable Energy Association opposes Hager’s bill because it abolishes S.B. 3’s Renewable Energy and Energy Efficiency Portfolio Standard.
“Eliminating the REPS as this legislation seeks to do would be needlessly destructive to a job-creating industry and would result in government interference into a well-functioning market that continues to grow and attract investment,” said Betsy McCorkle, the association’s director of government affairs.
North Carolina’s energy market is tightly regulated and under monopoly control of utility companies, McCorkle said in an email.
She said S.B. 3 offered “the first real opportunity for clean energy companies to compete with the utilities and offer consumers a choice.”
By opposing Hager’s bill lawmakers would signal to the investment and business communities “that North Carolina will continue to lead the nation as an energy innovator, welcoming entrepreneurs and investors to this state,” McCorkle said.
“According to a recent study released by RTI International and La Capra Associates, North Carolina’s clean energy industry has created over 21,000 job-years and has generated $1.7 billion in economic benefit since 2007,” McCorkle said. A job-year is a statistic estimating one person working full time for one year.
“The study also found that by 2026, clean energy policies will have saved ratepayers $173 million when compared to not having such policies,” she said. Links to the full study and summary findings are available here and here.
“I would say they’re nothing but government employees if you think about it,” Hager said, because renewable sector jobs are funded by a pass-through tax the state levies and diverts to renewable energy companies. “The only thing they’re not getting is retirement.”
The 21,000 job-years claim is “how you deflect attention from not creating a lot of jobs,” Hager said. It is not the same as 21,000 full-time jobs.
“There are very, very few permanent jobs that are created out of this industry,” Hager said. Dividing the 21,000 job-years by the six years from 2007-12 would equal just 3,500 jobs.
“These subsidies don’t create jobs in the first place,” said Nick Loris, policy analyst at the Washington, D.C.-based Heritage Foundation.
“What you’re really doing is promoting this cronyism and dependence on the government,” Loris said.
“A lot of these technologies that are dependent on subsidies don’t realize their true costs of entering the marketplace, and they become dependent on the government, which is why you see these subsidies extended year after year,” Loris said.
Higher-cost renewable energy can be a crucial factor in the business climate.
“That’s why you have a lot of companies, especially the energy-intensive ones, moving to places like Pennsylvania and Ohio, where there is this an abundantly cheap source of natural gas,” Loris said.
Although his bill has been referred to four committees, Hager remains undaunted.
“The speaker has done me a favor,” he insisted. “As this goes through the committees it should have a proper vetting. By the time it gets to the floor it should be very well vetted. Almost everyone on the floor would have heard it.”
Hager’s desire is to have the bill heard in two committees per week to speed the process.
“I’ve got four primary sponsors and I’ve got over 20 co-sponsors,” Hager said. “We seem to have a good vote count so far.”
The bill “has drawn a lot of interest on the Senate side,” he said. “We can plow that ground so when it gets there it will be easier to pass.”
Hager said Thursday that Tillis and he “talk almost every day on this bill. … He just wants to be careful and be sure we don’t cause energy rates to go up, or devastate a sector that’s growing right now.”
Jeff Brooks, a spokesman for Duke Energy, said, “Obviously we’ve been reviewing the legislation and monitoring its progress.”
S.B. 3 “was a carefully crafted consensus bill when it was created and passed,” and “Duke Energy did not request modifications to S.B. 3,” Brooks said.
The utility giant will “once again work with H.B. 298 sponsors and interested stakeholders to find consensus on this legislation,” Brooks said.
Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.