Renewable Electricity Standards Have No Statistically Significant Impact on Rates

According to Energy Information Administration data, from 2000 – 2010, the presence of a renewable electricity standard has no statistically significant impact on how much rates changed over that decade.

There’s a thriving cottage industry devoted to debunking Robert Bryce of the Manhattan Institute.

Last October, Bryce said be believed a still-unproven experiment with neutrinos called our entire scientific understanding of global warming into question.

Earlier in the summer, he had the audacity to quote economist EF Schumacher’s book “Small is Beautiful” to unleash a factually inaccurate attack on renewables and promote nuclear power. (Ironically, Schumacher called nuclear an “incredible, incomparable, and unique hazard”).

And now, Bryce is claiming that renewable electricity standards (i.e. state targets for renewable generation) have caused state electric rates to increase by 32% from 2001 to 2010, concluding that states should “suspend or eliminate renewable energy mandates to ensure that electricity is affordable.”

This is a continuation of the scary-but-hollow argument that Americans for Tax Reform’s Grover Norquist tried to make last December in Politico.

The argument is as presumptuous and inaccurate as it was back then. And still no official agency backs up the claim that renewable energy targets have caused substantial increases in rates.

As Bryce well knows, most of the states with renewable electricity standards had higher rates even before putting targets in place. And because of the extraordinarily complex range of factors that go into pricing electricity — number of customers, average usage, infrastructure investments, etc — blaming these increases on renewable energy targets is misleading at best and an outright lie at worst.

Upon examining electricity rate data from the U.S. Energy Information Administration spanning the decade from 2000-2010, a Center for American Progress analysis found zero statistically-significant difference in how renewable electricity standards affect changes in rates. In states where we do see rate increases, it is difficult to quantify what impact these standards had compared with the myriad other factors that drive changes.

For example, MIT researchers determined that there were 14 reasons why California’s rates varied from the national average. In Hawaii, which had the highest rate increase, it was imports in oil for electricity generation that caused such a dramatic hike. And in Maryland, a state with the next-largest increase, the impact of deregulation has been the primary factor.

In 2008, the Lawrence Berkeley National Laboratory examined the range of states with renewable energy targets and found a roughly 1% impact on rates. And in a progress report on Michigan’s renewable electricity standard issued last month, state regulators found that renewable energy contracts were coming in 30% lower than contracts for coal: “the cost of energy generated by renewable sources continues to decline and is cheaper than a new coal-fired generation,” concluded regulators.

There is no doubt that we will see rate increases in some areas of the country, particularly those that are highly dependent on coal and have done little to implement renewables. These impacts should not be overlooked. But experience in various states shows — most recently in Michigan — renewables are increasingly cost-competitive with coal, a resource that is only getting more expensive.

To claim that renewables have already driven up rates by double digits is simply not true, and is not backed up by any official analysis.

5 Responses to Renewable Electricity Standards Have No Statistically Significant Impact on Rates

  1. Heikki Willstedt Mesa says:

    In fact EF Schumacher wrote: “Of all the changes introduced by man into the household of nature, large-scale nuclear fission is undoubtedly the most dangerous and profound” “No degree of prosperity could justify the accumulation of large amounts of highly toxic substances which nobody knows how to make safe and which remain an incalculable danger to the whole of creation for historiacal or even geological ages. To dos so is a transgression against life itself”(Chapter 4 of Small is Beautiful)

  2. frank says:

    The case for RE may be even stronger in 2011.
    Anecdotally, Michigan had less than 1% wind for the past two years and their electric rates went up 5%.

    Iowa wind rose from 15% of total generation in 2010 to 19% in 2011 and their electric rates dropped 1%.

  3. Larry Gilman says:

    I have no quarrel with the content of this piece, but that graph is one of the worst I’ve ever seen.

    A continuous, real-number x axis, marked in tenths yet, for a binary state variable?? You might as well use the positive real number line to represent “Pregnant” (at 0) and “Not Pregnant” (at 1) — and be sure to mark in hundredths for all the states in between that happen not have been measured . . .



  4. Michael Goggin, AWEA says:

    Thanks for this great debunking of this latest attack from the Robert Bryce and his fossil fuel industry sponsors.

    I’d go even further and add that the data supports the conclusion that wind energy is actually helping to reduce electricity rates. For the 30 states with the least installed wind capacity, electric rates increased by an average of 26.74% between 2005 and 2010, according to U.S. Department of Energy data. In contrast, for the 20 states that produced the largest share of their electricity from wind in 2010, consumer electricity prices increased an average of only 15.72% between 2005 and 2010. Moreover, for the top 10 states in wind generation, electricity prices increased an average of only 10.94% between 2005 and 2010.

    There are many factors that influence the price of electricity, so this isn’t necessarily proof that states with more wind will always have smaller electricity price increases. What is clear is that the data stands in strong opposition to those who have tried to make specious claims that wind energy will drive up electricity prices.

    Michael Goggin,
    American Wind Energy Association

  5. Either the link or the file at the site the link (“For example, MIT researchers determined that there were 14 reasons why California’s rates varied from the national average.”) points to is damaged. Does anyone know the title to the MIT research and how I can obtain it?

    Thanks! Michael Picker