Freezing, Studying Renewable Mandate Makes Sense | Eastern North Carolina Now

    Publisher's note: The author of this post is Becki Gray, who is Vice President for Outreach at the John Locke Foundation for the Carolina Journal, John Hood Publisher.

    RALEIGH     A mandate that 12.5 percent of North Carolina's energy eventually would come from renewable sources or energy efficiency was a bad idea back in 2007, when the idea was included in Senate Bill 3. Eight years later, the mandate officially known as the Renewable Energy and Energy Efficiency Portfolio Standard, or REPS, is still a bad idea.

    It's an expensive idea that North Carolina can no longer afford. Designed to take effect in phases, the original 3 percent mandate has jumped to 6 percent. Legislation moving through the General Assembly would put off future increases and authorize a study of North Carolina's energy needs. One thing we know for sure: Higher energy costs due to the mandates hurt North Carolina's economy.

    House Bill 332 would freeze REPS at the current 6 percent rate - just less than halfway to the 12.5 percent maximum scheduled for 2021. It also freezes the rider charged to residential customers for renewable energy at $12, rather than allowing that charge to nearly triple to $34.

    It eliminates waste and extra cost with standard contract revisions for small power producers. And probably most importantly, it sets up a study to look anew at the eight-year-old renewable energy requirements. The study would help determine what will work best for North Carolina moving forward.

    Here's why it's important to freeze the mandates and cost riders, take a break, and take a good look at the renewable energy mandate:

    1. The mandate forces North Carolinians to purchase an increasing amount of electricity that is more expensive and less efficient than electricity generated from traditional sources.

    2. Energy costs have increased. Three of the four drivers of higher electricity costs in North Carolina are tied to the state's renewable energy mandates. North Carolina's rates have increased 2.5 times as much as the national average since 2008. Even at its lowest level (3 percent), the REPS mandate has increased electricity costs a whopping $276 million thru 2014.

    3. Fully implemented under the current law, the mandate will result in the loss of 3,600 jobs. Job losses from increased cost of energy exceed those created by renewable energy industry construction and maintenance. Further losses include $43 million in lost investment, $44 million in lost revenue, $57 million in lost disposable income, and $140 million in lost state gross domestic product.

    4. In addition to the mandate, solar project tax incentives allow for 100 percent return on investment within six years for renewable energy property development projects. 100 percent! The money to generate that return is paid by other taxpayers and through resources not available to other businesses. Solar industry tax credits totaled $224 million from 2010 to 2014.

    5. Legislation to repeal or phase out the mandate has been introduced in 2011, 2013, and again in 2015. Currently before the General Assembly, House Bill 332 simply freezes the REPS mandate it where it stands at 6 percent.

    6. A comprehensive study will determine if the mandate offers a true benefit to the citizens of North Carolina. The study will examine potential reforms, security, stability, and long-term energy needs.

    The renewable energy mandate is driving up the cost of energy. When the cost of energy goes up, the cost of everything goes up - for residential customers, for consumers, for business owners, and for taxpayers. As lawmakers continue reforms to stabilize and grow the economy, low energy costs are critical to attract and retain businesses.

    A March 2015 study by the Taxpayers Protection Alliance reminds us:

• The sobering reality is that Big Solar's day in the sun simply isn't possible, nor is it economically sustainable, without continuous diversions of tax money, government assistance, energy portfolio carve-outs, and utility cost shifting schemes - all aimed at creating a "market" for solar that it can't establish on its own.

    Hundreds of millions of dollars that go to one industry have real costs - costs North Carolina just cannot afford. It is time to freeze the mandate and take a good hard look at what works and what doesn't.