The Palmetto Insider

The blog of the South Carolina Policy Council

Congress Set to Raise Utility Rates for South Carolina Consumers?

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We’ve written before on the General Assembly’s interest in adopting a renewable energy portfolio standard for South Carolina. In short, such a standard would mandate that a certain percentage of all electricity generated in South Carolina be derived from renewable energy sources, such as solar and wind.

In 2010, lawmakers introduced legislation (H 4241) that would have required government-run utilities to “develop standards for the promotion, encouragement, and expansion of the use of renewable energy resources in their service territories.” This is a first step toward mandating a renewable energy portfolio for the state.

This bill did not emerge from committee. But another threat to real energy independence – that is, energy choice – lies ahead. A bipartisan coalition has pledged to pass renewable energy standard (RES) legislation during Congress’ “lame-duck session” – that is, the remaining weeks of session after the November election (when few voters will be paying attention).

One such bill, introduced by Senator Jeff Bingaman (D-N.M.), would eventually require 15 percent of U.S. electricity to be generated from renewable energy sources.

Daren Bakst, director of Legal and Regulatory Studies at the John Locke Foundation of North Carolina, discusses the federal legislation here.

As Bakst cautions:

“Electric utilities won’t be the ones stuck with the higher costs imposed by an RES. Since these costs won’t be labeled in electricity bills, they will be hidden from electricity customers.

“An RES may not be as severe as an economy-wide cap and trade program for CO2, but that doesn’t change the fact that it’s an energy tax, created by forcing electricity customers to buy unreliable and costly renewable energy.”

Moreover, such a mandate would force states that have few renewable energy sources (read: South Carolina) to purchase energy from other renewable-energy-rich states, like Kansas and Iowa.  Writes Bakst:

“Many states do not have the same renewable energy resources as other states. To meet the renewable energy requirements in the Bingaman bill, electric utilities could purchase renewable energy across state lines. Those within a particular state, though, would likely never use this out of state electricity. For example, an electricity customer in Georgia would be subsidizing the electricity generation for people in Texas. …

“Moreover, there’s a reason why there’s only one state in the southeast (North Carolina) that has its own RES: southeastern states don’t have strong renewable energy resources. A federal mandate would act as a wealth transfer from southeastern states to states with strong renewable resources.

“Nine states and the Southeastern Association of Regulatory Utility Commissioners, sent a letter to Congress in 2007 opposing a federal renewable energy requirement, arguing:

“The reality is that not all states are fortunate enough to have abundant traditional renewable energy resources, such as wind … this is especially true in the Southeast and large parts of the Midwest.”

Concludes Bakst:

“An RES is a combination of bad elements of a cap and trade bill and ObamaCare. It’s an energy tax. It ignores state rights and forces Americans to buy something they don’t want. Even worse, a federal RES would fundamentally alter the underlying principle that utilities should be focused on using the lowest cost and most reliable sources of electricity. Common-sense electricity policy would be destroyed in favor of environmental extremism and self-interested politicians.”

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Written by Jameson Taylor

October 13, 2010 at 10:39 am

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