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My Turn: New Hampshire lawmakers raid renewable energy fund

Ratepayers take notice: Once again, state legislators are raiding the New Hampshire renewable energy funds, which are financed via increased electricity rates paid by you for purported green programs like the Regional Greenhouse Gas Initiative (RGGI) and Renewable Portfolio Standards (RPS).

The $16 million heist of renewable energy funds used to cover holes in the 2013-2014 budget proposal should forever end any delusions that the inflated electricity rates we pay to support RGGI and RPS are intended to promote renewable energy programs and energy efficiency.

In 2010, then-Gov. John Lynch set this precedent when he plundered $3.1 million from the Greenhouse Gas Emissions Reduction Fund to cover a budget shortfall.

Ratepayers should be outraged by these actions.

The RPS mandated by the Legislature requires electricity providers to obtain Renewable Energy Certificates (RECs) as a percentage of retail electricity supplied to end-use customers. In 2013, suppliers must have 12 percent of their load generated from renewable energy sources like wind, solar, biomass or small-scale hydro. For every 100 mWh that a provider supplies to customers, 12 mWh have to come from renewable energy sources. If providers don’t meet these requirements, they have to pay Alternative Compliance Payments (ACPs), which have rates that vary from $26.50/mWh to $55/mWh depending on the renewable energy class. Based on data provided by the state Public Utilities Commission, New Hampshire electricity providers paid $47 million in REC and ACP payments from 2008 to 2010 and $19 million in ACP payments in 2011. Since REC and/or ACP payments are made by electricity providers, those costs are passed on to ratepayers.

So why are these providers choosing to pay tens of millions of dollars in ACP payments instead of buying renewable electricity? Because “green” energy is two to five times more expensive than traditional sources like natural gas, nuclear, coal and large-scale hydro. The penalty is easier to bear (and better for ratepayers) than sourcing the power from wind, solar or biomass.

RGGI is a regional tax on carbon emissions from fossil fuel generation in New England, New York, Maryland and Delaware. When New Hampshire entered into the compact in 2008, the regional cap on emissions was set at 165 million tons (after New Jersey’s departure). Largely due to a lackluster economy and low natural gas prices, 2012 emissions declined to approximately 90 million tons.

During this time, the price of CO2 allowances fell from $3.50 to the artificially supported floor price of $1.89 – additionally, up to 80 percent of allowances went unsold. This had the folks at RGGI Inc. (yes, they are a corporation) scurrying to justify their existence, and they recommended in their most recent report to reduce the 2014 cap to 91 million short tons because “there is a significant excess supply of allowances relative to actual emissions levels in the region.”

In a nutshell, emissions have been reduced and allowances aren’t worth as much as RGGI Inc. had hoped, so now they need to extract even more money from ratepayers by making CO2 permits artificially scarce. But wasn’t the point to reduce emissions (which has happened) and not just push higher costs on to generators and, ultimately, ratepayers?

Our Legislature and governor have decided to raise the price of these allowances two to five times the current price of $2 per short ton, costing New Hampshire generators an additional $22 million to $55 million annually (combined cost to all RGGI generators will be $360 million to $910 million) – all borne by ratepayers in the form of higher electric bills.

New Hampshire established a Greenhouse Gas Emissions Reduction Fund, which is managed by the state PUC, to allocate grants from RGGI funds for efficiency projects in New Hampshire. When not pilfered by state government, here is where some of the ratepayer dollars have gone: $148,927 to Stoneyfield Yogurt; $330,000 to Dartmouth College; $2 million to the Business Finance Authority; $1.5 million to the Community Development Finance Authority; $1.36 million to the Retail Merchants Association of New Hampshire; $7.64 million to PSNH, National Grid, NH Electric Co-op and Unitil; and more than $1 million to cities and towns throughout New Hampshire. Ratepayers are subsidizing corporate and taxpayer projects that businesses and municipalities can and should be funding on their own.

These initiatives have been sold to voters and stakeholders by politicians and bureaucrats as necessary to ignite renewable energy and energy efficiency projects. They continue to use these reasons to justify higher electricity rates, but now they are also raiding the funds to pay for unrelated programs. Ratepayers are used to paying more in the name of green energy and energy efficiency and getting nothing in return. Now that they are seeing dollars taken out of their pockets, I wonder how the green lobby will respond to being on the short end of the stick?

(Marc Brown is the executive director of the New England Ratepayers Association, the nonprofit dedicated to protecting ratepayers in New England.)

Legacy Comments4

Mr. O'Rourke, Please do not cherry-pick your information. In the ISO-NE's wind integration study thousands of megawatt-scale turbines would need to be built to reach a 20% wind penetration and New Englanders would pay between $15-24 billion to construct over 4,000 miles of new 500kv transmission to deliver the energy-- a scenario that is (a) cost prohibitive and (b) would never be accepted in the region. In the same scenario, the ISO found NE could NOT retire any capacity generators now operating and proposed. We'd see an increase in capacity payments for reliable generators and the likely continuation of above market power purchase agreements for wind to ensure the wind plants cover their capital costs. Big wind would bankrupt New England.

Actually, the EIA data is flawed in its cost comparisons. For example, the levelized cost data does not take into account the cost of having other traditional forms of energy on standby for when the wind does not blow -- which is about 3/4 the time in New England. There is no consideration for the more inefficient use of these backup generators and the higher cost of generation vs use as base load on a continuous basis. The EIA data also doesn't account for the higher costs to build new transmission lines for remote wind facilities and the associated line losses with long distance transmission - both of which should be part of the levelized cost equation. Readers should ask themselves, if wind is so cheap, why do projects like Cape Wind need Power Purchase Agreements 3-5 times more expensive than available wholesale power? The answer: because despite the marketing hype from groups like AWEA, wind power is an economic disaster for electricity generation. Even the Department of Energy acknowledges this. Their analysis of Installed US Wind Project Costs shows that wind power is getting MORE expensive, going up 65% on a per KW basis between 2004 and 2010 (latest year available). The only thing keeping wind afloat are government schemes like RPS, the production tax credits, investment tax credits, RGGI and federal loan guarantees. Its time to cut wind loose.

In many areas, newly built wind energy generation is cost competitive with all other sources, according to data from the U.S. Energy Information Administration. Studies have also shown that adding wind power will have economic and environmental benefits for the New England region. According to the regional grid operator’s 2010 New England Wind Integration Study, wholesale electricity prices would decline by more than 10% and electric sector carbon dioxide emissions by 25% if the region generated 20% of its power from wind. That’s the main reason why every New England state has enacted a strong policy in favor of advancing new renewable energy sources.

Readers can thank Haggie as that gimmick came from her budget

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