Gone with the Wind: IRS can’t measure effectiveness of $14 billion dollars in green energy subsidies

July 21, 2015 by michael · Comments Off
Filed under: New Energy Economy, preferred energy, renewable energy, solar energy, wind energy 

A recent report from the Government Accountability Office (GAO) reveals that IRS tax subsidies to green energy operators have resulted in $15.1 billion in foregone revenue to the federal government, $13.7 billion of which was lost to renewable energy projects.

The GAO has sounded its concern that Congress cannot evaluate the effectiveness of Investment Tax Credit (ITC) or Production Tax Credit (PTC) programs funded by this money. Evaluation becomes difficult when “the total generating capacity [the projects] supported is unknown because the Internal Revenue Service (IRS) is not required to collect project level data from all taxpayers claiming the ITC or report the data it does collect, nor is it required to collect project-level data for the PTC.” So, as of now, any decisions made by Congress regarding the extension of the ITC or PTC are based on rough estimates, an environmental moral compass, or just how a representative is feeling that particular day.

What data has been reported suggests a certain government addiction to renewable energy subsides. From 2004 to 2013, around 2,000 renewable energy projects were built adding 69,000MW of generating capacity. This number, however, is dwarfed by the 157,000MW of generating capacity added by just the 500 traditional utility scale electricity generation projects built during the same time. For a tenth of the cost of renewable projects, traditional energy projects were able to generate more than double the energy.

In addition to green energy subsides, most states have implemented some form of a renewable portfolio standard (RPS) that requires a certain percentage of the electricity coming from retail service providers must be obtained from renewable sources. This artificial increase in demand along with subsides may be giving renewables like solar and wind a better chance than the technology in its current state deserves.

The GAO concludes that eliminating the ITC/PTC will almost certainly decrease the number of new renewable energy projects. Without these tax subsides green energy developer’s returns would decline and a rise in prices to compensate for the withdrawal of federal support would turn renewable energy into a luxury item.

Gina Larson is a Future Leaders intern and is currently a student at American University, majoring in International Relations.

July 16 Colorado Energy Roundup: Sec. Jewell adds Colowyo Mine visit; renewable energy mandate upheld

July 16, 2015 by michael · Comments Off
Filed under: CDPHE, Environmental Protection Agency, Legal, preferred energy, renewable energy 

A week after the Department of the Interior declined to move forward with an appeal in the Colowyo Mine case, and facing mounting pressure to visit the northwest portion of Colorado during a scheduled trip to Aspen, Sec. Sally Jewell appears to have conceded to a meeting with county commissioners:

Moffat County Commissioner John Kinkaid said Wednesday that Jewell has added a meeting with northwest Colorado county commissioners to her itinerary Friday following her speech at the Aspen Institute.

“We look forward to meeting Secretary Jewell this Friday evening,” Kinkaid said. “I hope that she will be able to give us some assurances that our miners can keep working.”

He said he expected the meeting to include commissioners from Moffat and Rio Blanco counties, whose communities would bear the brunt of a mine closure. The meeting will take place in Glenwood Springs.

Jewell had come under pressure to visit the area after it was announced that she would deliver remarks Friday at the Aspen Institute, about a three-hour drive from Craig, where residents are alarmed about the future of the mine.

We’ll keep you posted on developments of the planned meeting.

***

Colorado’s preferred energy renewable mandate was upheld this week:

The mandate, which voters passed in 2004 and expanded in 2010, was challenged by the free-market advocacy group Energy and Environment Legal Institute. The group argued that the renewable energy requirements violate the U.S. Constitution.

The lawsuit claimed that the requirement that large utilities such as Xcel Energy get 20 percent of their electricity from renewable sources violates constitutional protections for interstate commerce.

The plaintiffs argued that because electricity can go anywhere on the grid and come from anywhere on the grid, Colorado mandate illegally harms out-of-state companies.

The 10th Circuit Court of Appeals in Denver disagreed. The three-judge panel ruled that the mandate does not wrongly burden out-of-state coal producers. The judges also pointed out that Colorado voters approved the mandate.

The full text of the ruling can be found here.

***

For those who do not think increased energy costs–whether from increased cost of supply of fuel, onerous regulations, or government picking (more expensive) energy winners–affect lower and middle income families in Colorado, a new examination of the state’s Low-Income Energy Assistance Program (LEAP) reveals how devastating even modest price increases in energy can be:

About 430,000 households in Colorado — 22 percent of all households — are eligible for federal energy assistance.

These households have incomes below 150 percent of the federal poverty level, or about $36,372 for a family of four.

About 13 percent of Colorado households are below the federal poverty line of $24,250 for a family of four.

The federal Low-Income Energy Assistance Program, or LEAP, administered by local agencies, provided $47 million for heating bills during the 2014-15 season.

The article laments that program has a low reach at the present time, with only 19 percent of those eligible receiving outreach.

But the article’s lede is buried–even small, incremental increases have a large and outsized effect on low-income folks given the portion of income they spend on energy:

Xcel, the state’s largest electricity utility, calculates monthly payments based on 3 percent of a household’s income.

Average households pay 2 percent to 3 percent for energy, compared with low-income households, which often pay as much as 50 percent.

“That leaves very little for food, clothing, medicine,” said Pat Boland, Xcel’s manager of customer policy and assistance.

“Once we get them in the door, we want to keep them in the door,” Boland said in a presentation.

According to the article, Black Hills reaches only 10 percent of those eligible within its system. It pays for the assistance by charging other ratepayers, and is considering a rate hike to cover the program, which is currently losing money. That hike, along with three other rate increases since 2008, make Black Hills among the most expensive electricity providers in the state, the Post article said.

***

Despite a quiet 2015, fracking is still maintaining a low boil on the backburner of the state’s energy debate, and there is every indication that it won’t be simmering any time soon, and Democratic Rep. Jared Polis told the Associated Press that options remain:

Polis said fracking could be on the 2016 ballot if state officials don’t further regulate the industry. He stopped short of saying whether he would organize the effort, but he wants lawmakers and regulators to adopt three proposals that weren’t formally recommended by the task force.

One would let local governments impose stricter rules than the Colorado Oil and Gas Conservation Commission, charged with regulating drilling statewide. Another would change the commission’s role from facilitating oil and gas development to simply regulating it. The third would set up a panel to resolve disputes between energy companies and local governments or property owners before they land in court.

It remains to be seen whether or not activists, with or without Polis’s sponsorship, pursue a strategy like they did in 2013, targeting friendly and even tossup municipalities with fracking bans and moratoria, or wait for statewide opportunities in the 2016 Presidential election cycle.

***

The Bureau of Land Management has closed off nearly 100,000 acres of federal land from future leasing:

The Bureau of Land Management rejected all 19 protests from conservation groups, the oil and gas industry and other interests in approving a new resource management plan for the Colorado River Valley Field Office.

The Colorado River Valley Field Office, in Silt, manages more than 500,000 acres of land and more than 700,000 acres of subsurface federal minerals in Garfield, Mesa, Rio Blanco, Pitkin, Eagle and Routt counties. The agency says the majority of the 147,500 acres with high potential for oil and gas production under the office’s jurisdiction are already leased and will continue producing under the plan.

The plan closes 98,100 acres for future leasing, including in the Garfield Creek State Wildlife Area near New Castle, areas managed for wilderness characteristics, areas of critical environmental concern, municipalities and designated recreation areas.

***

In addition to the endangered Colowyo Mine, another Colorado mine with 150 employees faces environmental review and possible closure:

A second Craig-area coal mine apparently also will have to undergo a remedial federal environmental review process if it hopes to avoid a shutdown based on a recent court order.

The Trapper Mine near Craig is now looking at going through the same kind of review currently underway in the case of the Colowyo Mine between Craig and Meeker following a federal judge’s ruling in May.

U.S. District Court Judge R. Brooke Jackson, in a suit brought by WildEarth Guardians, found that the federal Office of Surface Mining Reclamation and Enforcement illegally approved expansions of the two mines because it failed to provide public notice of the decisions and account for the environmental impacts.

The Trapper Mine faces discrepancies over permitted areas and coverage under filings with Judge Jackson, who did not impose a similar ruling as that issued for the Colowyo Mine.

In a notice filed last week to alert the court about the new information, the Trapper attorneys said they support doing remedial environmental analysis involving the Trapper Mine after the Colowyo review is done.

Bob Postle, manager of the program support division for the OSMRE’s western region, said the notice has “just been filed, and we’re now working through how we’re going to address it.”

Given the discrepancies, it isn’t clear at this moment whether a new or remedial environmental review is necessary, according to Trapper’s legal counsel.

***

In a meeting with Republican Senator Cory Gardner, western slope businesses and entrepreneurs described facing onerous regulatory burdens imposed by DC bureaucrats:

A Moffat County sheepherder, Delta hardware shop owner and Grand Junction manufacturer all walked into a meeting Friday with U.S. Sen. Cory Gardner, R-Colo., each with much the same punchline in mind.

The common theme: The federal government is reaching too far into their businesses, discouraging them from seeking out new ways of doing business and growing.

Constraining regulations have “taken the creativity out of business,” Jim Kendrick, owner of Delta Hardware, told Gardner. “The move is to make us all do business the same way. That’s stifling growth.”

Gardner met with two dozen western Colorado business and economic leaders at Colorado Mesa University in hopes of finding ways to improve the state’s sputtering rural economy.

“I spend all my time on regulatory compliance and none of it on product development,” one Department of Defense contractor said. That would result in pushing more business to bigger vendors able to hurdle all of the regulatory red tape due to a larger staff.

Kansas pushes back against EPA Clean Power Plan, changes state renewables mandate to voluntary

Unlike Colorado’s failed attempt to provide state oversight to proposed Environmental Protection Agency’s “Clean Power Plan” regulations, Kansas’ legislature has passed requirements for any CPP state implementation plan, including no plan at all, should it conflict with ongoing litigation against the EPA’s power to bring forth the CPP:

Kansas governor Sam Brownback (R) signed a bill setting parameters for how the state complies with the US Environmental Protection Agency’s (EPA) proposed Clean Power Plan.

The bill, HB 2233, requires state agencies responsible for drafting a state implementation plan (SIP) to examine potential electricity rate impacts that may arise from complying with the EPA rule to address CO2 emissions from existing power plants. The law mandates that the Kansas Department of Health and Environment identify ways to avoid unreasonable costs under a best system of emissions reductions, which may include emissions trading or emissions averaging across the generation fleet. Brownback signed the bill into law on 28 May.

The law creates an oversight committee of state lawmakers that will track the progress of and vote on the SIP. The Clean Power Plan Implementation Study Committee will run from 1 July 2015 to 30 June 2017.

Like other states such as New Mexico, Kansas state agencies have called the EPA’s CPP into question, “citing concerns over its legality, federal overreach into grid reliability and a limited timeline for implementation.”

Those concerns have prompted Kansas to join other state attorneys general in legal challenges targeting EPA’s ability to bring forth regulations like those under the CPP:

Attorney general Derek Schmidt (R) is among 19 state attorneys general who have called on EPA to withdraw its proposed CO2 standards for new power plants, and the state is participating in two lawsuits challenging the Clean Power Plan proposal.

The new law allows state regulators to not submit a plan if the attorney general determines that such a plan would conflict with Kansas’ legal position in current or pending legal challenges against the rule.

In testifying for Colorado’s Electricity Consumers’ Protection Act (SB 258), attorney Mike Nasi outlined possible legal objections to the EPA’s proposed rules.

Colorado’s SB 258 would have tasked the Public Utilities Commission, with input from the Colorado Department of Public Health and Environment, as well as approval from the state legislative body, with creating a CPP SIP for the state that considered costs and required a full, public, and deliberative process rather than unilateral executive agency rulemaking from CDPHE under the Governor John Hickenlooper’s direction.

With the defeat of the bill, Governor Hickenlooper announced that, unlike Kansas’ measured approach, Colorado would capitulate to the EPA’s CPP and push forward with state implementation.

***

Colorado environmentalists and renewable energy advocates enjoy touting other states’ efforts on issues including renewable energy standards and renewable subsidies.

But this year, Kansas modified its RES, making the mandate a “voluntary goal”:

Kansas governor Sam Brownback (R) yesterday signed into law a bill converting the state’s renewable energy standard to a voluntary goal.

The bill, SB 91, replaces the state’s standard, which required 20pc renewable energy use by 2020, with a voluntary target on the same timetable. SB 91 also exempts existing renewable energy facilities in the state, mostly wind farms, from property taxes and gives new renewable energy facilities a 10-year property tax exemption.

Wind accounted for 21.7pc of Kansas’ generation mix in 2014, according to the American Wind Energy Association.
….
While the bill was supported by some state wind industry and business groups, environmentalists have criticized it, saying it should have at least called for a higher voluntary goal to give utilities “something to aspire to.”

In a free market, utilities and others involved with energy production will voluntarily move to where the market leads–they will “aspire to” serve their customers with an energy fuel mix that best suits the state’s and individual utility’s needs and consumer’s wants.

Government should not be picking energy or electricity winners and losers, and moving from a legal mandate to voluntary guidelines is a step in the right direction for free market energy, as is limiting a property tax exemption from permanent to a sunset at 10 years.

Oregon’s Cannibalism of Environmentalism

April 1, 2013 by Amy · Comments Off
Filed under: Archive, Legislation, New Energy Economy, renewable energy 

By Brandon Ratterman

Almost 60 percent of Oregon’s electricity is generated from hydroelectric power, which is considered by the Environmental Protection Agency (EPA) as a renewable energy resource. However, the state is struggling to meet the mandated renewable portfolio standard (RPS) of 15 percent renewable generation by 2015, as hydroelectricity generated at facilities built before 1995 does not qualify as a renewable resource. Since most hydroelectric facilities were built before 1995, the state has been forced to use wind energy to fill this void. Unfortunately, wind energy in Oregon produces some counterproductive effects.

Bonneville Power Administration (BPA) is one of the main providers of hydroelectric power in Oregon, but because their facilities do not contribute to the mandated renewable portfolio standards, they are forced to give wind producers access to their transmission lines. As a result, the amount of electricity that BPA can supply to the grid is reduced, and BPA is forced to spill excess water over their dams, resulting in increased turbulence and toxic levels of nitrogen.

Oregonians annually spend over half a billion dollars to protect the fish and wildlife, which are now threatened by these increased nitrogen levels. As a result, Oregon courts are requiring hydroelectric producers to remedy the situation, despite the fact that wind energy is the root cause of this issue. Organizations such as BPA are being forced to pay wind producers to power down during times of high runoff.  On average, this is estimated to cost Oregon ratepayers $12 million annually, with potential costs ranging up to $50 million. In return, Oregonians will receive the same electricity, derived from the same energy source, as they did in the past.

The fact that Oregon’s hydroelectric power does not count toward its renewable portfolio standards, even though the EPA recognizes it as a renewable source, proves that the concept of “green energy” is geared toward increased spending that makes electricity more expensive.  If lawmakers are committed to reducing emissions in an economically sustainable way, hydroelectricity needs to be recognized as a renewable resource.

Roll back Colorado’s renewable energy mandate?

February 16, 2012 by Amy · Comments Off
Filed under: Archive, HB 1365, New Energy Economy 

Just around dinner time last night the House Transportation Committee, chaired by Weld County GOP Rep Glenn Vaad, moved HB 1121 (detailed here) out of committee on a 10-3 vote and to the whole House for a floor debate on Colorado’s renewable energy mandate.

Rep. Ray Scott’s (R-Grand Junction) Ratepayer Bill of Rights, dubbed “RayBOR” by Rep Robert Ramirez (R-Westminster), was amended by the committee and became a bill allowing the Public Utilities Commission (PUC) the discretion to roll back Colorado’s 30 percent renewable energy mandate if the PUC determines that the cost would be detrimental to ratepayers.

Several interesting points from last night’s committee hearing:

  • Three Democrats voted with Republicans to move the bill out of committee including Dave Young Greeley), Angela Williams (Denver), and Matt Jones (Louisville).
  • Even though he voted against moving the bill out of committee, Democrat Randy Fischer (Fort Collins) made a point of saying the renewable energy mandate is worthy of a floor debate.
  • Despite testimony directly contradicting him, Democrat Max Tyler continues his renewable fantasy that the 30 percent mandate only costs ratepayers 2 percent.

The floor debate on RayBOR will be spirited. Because it doesn’t force the roll back of the renewable mandate but rather provides more discretion for the PUC, I think it has a good chance of moving out of the House and to the Senate.

Full disclosure: I testified on behalf of the Ratepayers Bill of Rights and will have my testimony posted shortly.

30 percent higher average electric rates in states with RPS

December 27, 2011 by Amy · Comments Off
Filed under: Archive, New Energy Economy 

The average residential electric rate in states with a Renewable Portfolio Standard (RPS) is nearly 30 percent higher than states without an RPS. An RPS is a state based policy that requires electric power “providers to supply a specified minimum amount of customer load with electricity from eligible renewable energy sources,” such as wind or solar. The average for states with an RPS is 12.99 cents per kilowatt hour and 10.01 cents in states without an RPS.

Do the math. For a family of four that averages 1000 kilowatt hours per month, the RPS state average electric rate would make their annual bill $1558.00. While the non-RPS average electric rate would cost that same family only $1201.00 annually.

As for Colorado, we reported earlier that our electric rates are lower than the national average for now now, but they are higher than all neighboring states and second highest in the Rocky Mountain West.

We have long argued that renewable energy mandates make electric bills needlessly more expensive despite the presence of rate caps and the myth of market forces. The following chart based on residential rate information from a recent USA Today article and RPS information from the U.S. Department of Energy seems to prove it as well. (States with an asterisk have voluntary goals rather than mandates)

State RPS Year Residential cost in cents per kw
Arizona

15%

2025

10.67

California

33%

2030

14.75

Colorado

30%

2020

11.04

Connecticut

23%

2020

19.25

District of Columbia

20%

2020

14.01

Delaware

20%

2019

13.8

Hawaii

20%

2020

28.1

Iowa

105 MW

10.42

Illinois

25%

2025

11.52

Massachusetts

15%

2020

14.59

Maryland

20%

2022

14.32

Maine

40%

2017

15.71

Michigan

10%

2015

12.46

Minnesota

25%

2025

10.59

Missouri

15%

2021

9.08

Montana

15%

2015

9.16

New Hampshire

23.80%

2025

16.32

New Jersey

22.50%

2021

16.57

New Mexico

20%

2020

10.52

Nevada

20%

2015

12.36

New York

24%

2013

18.74

North Carolina

12.50%

2021

10.12

North Dakota*

10%

2015

8.13

Oregon

25%

2025

8.87

Pennsylvania

8%

2020

12.7

Rhode Island

16%

2019

15.92

South Dakota*

10%

2015

8.97

Texas

5,880 MW

2015

11.6

Utah*

20%

2025

11.6

Vermont*

10%

2013

15.57

Virginia*

12%

2022

10.45

Washington

15%

2020

8.04

Wisconsin

10%

2015

12.65

Average

12.99

States without RPS

Alabama

10.67

Alaska

16.26

Arkansas

8.86

Florida

11.44

Georgia

10.07

Idaho

7.99

Indiana

9.56

Kansas

10.03

Kentucky

8.57

Louisiana

8.98

Mississippi

9.87

Nebraska

8.94

Ohio

11.32

Oklahoma

9.14

South Carolina

10.5

Tennesse

9.23

West Virginia

8.79

Average

10.01

Maine Gov takes aim at renewable energy standard

November 8, 2011 by Amy · Comments Off
Filed under: Archive, New Energy Economy 

Apparently Maine, not California (followed closely by Colorado), has the highest renewable energy standard in the country, and Governor Paul LePage wants to get rid of it. According to Gov. LePage, the 44 percent renewable energy requirement puts Maine at an economic disadvantage because it drives up the cost of energy in his state. Maine Public Broadcast Network quoted Gov. LePage:

The next closest to us is Massachusetts, at 20 percent, and we can’t compete with states like Wisconsin, Wyoming, Nevada, Nebraska, South Carolina, North Carolina, Kentucky, Tennessee.

So we need to get rid of the renewable portfolio. We need to reduce that.

Maine is not alone. Renewable energy is driving up the cost of electricity across the globe. The European Union predicts a 100 percent increase in electricity prices by 2050 due to their renewable energy portfolio standards (RPS). Earlier this year my colleague William Yeatman estimated that Colorado’s RPS will cost rate payers more than $100 million in 2011 alone.

Time for Colorado to follow Governor LePage’s lead.