Earlier this week, Governor Chris Sununu vetoed two energy bills, one of which would have expanded electric net metering practices in New Hampshire. Renewable energy advocates hope legislators will override his veto and push the bill into law. S.B. 446 would increase limits on net metering by towns and businesses, allowing bigger solar, wind, hydro and biomass projects to receive larger subsidies for the energy they generate. In a letter released Tuesday, Governor Sununu detailed his concerns, principally the massive economic costs the increased net metering caps would have on ratepayers across the state.
“These bills send our state in the exactly wrong direction. We need to be taking steps to lower electric rates, not passing legislation that would cause massive increases,” Governor Sununu stated in his missive following the vote. The Governor went on to point out that S.B. 446 would cost ratepayers at between $5 to 10 million annually and was a ultimately a handout to large solar energy developers.
Net metering is a bad deal for small businesses across New Hampshire. If signed into law, S.B. 446 would have quadrupled the state’s net metering caps, allowing residents who use solar panels to sell more of the excess energy they produce back to the power companies at inflated prices. This practice shifts the cost of grid upkeep back to non-solar users. Many small businesses who fit into this category ultimately pay higher rates and see no tangible benefit. Family Businesses for Affordable Energy believes that energy incentive projects should be able to compete on their own merits, and not place additional financial burdens on businesses and working families. Family Businesses for Affordable Energy applauds Governor Sununu on his decision and encourages leaders in other states to follow his example.
Both the Connecticut House and Senate have voted to pass S.B. 9, a bill that would roll back the state’s net energy metering program, much to the relief of ratepayers across the state who have been saddled with increasing energy costs to support Connecticut’s government-favored solar industry. While the legislation expanded the state’s Renewable Portfolio Standard to a 40 percent mandate by 2030, it also included provisions that significantly reduced the negative impacts of net metering by eliminating the system and supplanting it with what is known as a “buy-all-sell-all” incentive that would require a solar owner to sell his or her power to the grid at a new rate to be determined by the Public Utilities Regulatory Authority for a 20-year period. The user would have to buy back all the power they use at a retail rate. The buy-all-sell-all design separates consumption from production, which helps address the cost shift associated with net metering.
As FBAE has argued before, net metering unfairly shifts the costs of maintaining the grid and transmitting electricity onto non-solar customers, many of whom are family businesses. As solar panels proliferate, the fixed costs of the power grid must be shared over a smaller number of users. Utilities are now paying premium retail rates for the ever-expanding net-metered solar being generated in Connecticut, and they are not seeing the reduction in capacity, transmission and regional grid costs. As a result, non-solar ratepayers have been feeling upward rate pressure. Last year, Connecticut’s standard generation service rates increased twelve percent. Eversource and UI’s generation rate for residential customers increased by nearly twenty percent. These increases translate to sizable added monthly costs for businesses across the state. Net metering aggravates the problem by saddling ratepayers with ever-increasing prices. For small businesses with tight margins, every dollar counts. Rate increases exacerbated by cost-shifting add another obstacle for “mom and pop” family businesses trying to survive in the state that the Tax Foundation ranks 44th in the country for their business tax climate. FBAE applauds the Connecticut House and Senate for working to make the user/producer system more fair and friendly to family businesses across the Constitution State.
In January, Kentucky Energy and Natural Resources Committee Chairman Jim Gooch introduced a bill that would amend the compensation rate for solar users who sell the excess power they produce back to the utility companies. The 14-year-old system compensates solar users at the full retail price of the electricity, versus the wholesale price for these sales. This practice ultimately shifts costs to non-solar customers. While criticisms of net metering often center around the adverse effects on low-income individuals, evidence shows that the problem also extends to the majority of small businesses who don’t want or can’t afford solar. FBAE all business owners should fairly share in the fixed costs necessary to maintain the energy grid.
FBAE drafted a letter to the Kentucky Legislature, supporting Chairman Gooch’s legislation, H.B. 227. The bill will amend Kentucky’s net metering compensation system by paying producers at the wholesale rate instead of the full retail rate they currently enjoy. Additionally, the bill is not retroactive, and will not affect current users in the state.
Last April, Energy Secretary Rick Perry request a study of America’s electric grid to examine potential problems and solutions to maintain reliability. The study is of particular importance to family businesses who rely on affordable and reliable sources of electricity to run their businesses. Secretary Perry called for the study to not only examine the effects of renewable energy on the grid, but also develop policy prescriptions to help govern future energy production. Specifically, Secretary Perry sought to understand whether further increases in intermittent renewable energy sources would affect the reliability of the electrical grid and endanger base load power sources. Fears surrounding the study’s findings surfaced on both sides. Utility companies levied reasonable apprehensions about potential federal preemption of state energy policies on national security grounds. Exelon CEO Chris Crane made the case for a diverse energy portfolio and emphasized that nuclear energy’s contribution to baseload power generation was being “squeezed” and that the elasticity of nuclear energy made it an integral part of the power grid. Crane’s concerns are well founded. States like California have already begun to phase out nuclear energy production in the state.
Expectedly, in an attempt to head-off any criticisms of the reliability of renewable energy national green energy business associations like the Advanced Energy Economy, American Council on Renewable Energy, American Wind Energy Association, and Solar Energy Industries Association flooded the DOE with research arguing that the inclusion of more renewables in the power mix would have a measurable effect on system reliability. When the 154-page report was finally released late August, some environmentalist activists predictably belittled the study as a full-blown war on renewables and claimed that the study’s findings were a direct contradiction of what “other energy experts were saying” while others praised it as a fairly well-evidenced overview of the energy markets as they currently stand. Tom Kuhn, the President of Edison Electric Institute, which represents all U.S. investor-owned electric companies stated, “While we are still thoroughly reviewing the study, EEI has long advocated that our customers are best served by public policies that promote a balanced and diverse energy mix, which includes both traditional and renewable energy sources, and that also recognize the vital role 24/7 energy sources play in sustaining a secure, reliable, and resilient energy grid.” Kuhn went on to affirm the importance of energy production as an integral component of a robust infrastructure network that deserved investment, specifically pointing out the importance of defending energy infrastructure in the face of both man-made and natural disasters.
Ultimately the study details a few key findings. First, that market forces are driving baseload retirements, specifically the low price of natural gas as the largest contributor to maintaining older base load power plants. Nevertheless, the study indicated that coal, oil, and nuclear power generation still faces threats under the current market conditions, specifically with the difficulty in covering fixed costs in a market environment with cheap natural gas, subsidies for renewable energy sources, and government-mandated renewable energy goals. The report also pointed out the resiliency of coal-fired power plants and the stability associated with coal prices in comparison to the volatility of natural gas, as a positive for the continued use of coal power plants as part of base load production.
Our future energy grid must rely on sources capable of providing continuous output for base load power partnered with economically stable sources of electricity during peak load hours. States should examine their current goals, mandates, and subsidies for renewable energy production to ensure reliability and fair economic competition with base load production. We look forward to working with states to ensure family businesses are provided with affordable and reliable energy sources.
Recent news has highlighted the United States pulling out of the Paris Climate Agreement, however few articles have mentioned the US’s already impressive record of reducing carbon emissions without a government mandate. According to a new study by Morgan Stanley, the United States may meet the outlined minimums of the Paris Climate Agreement despite no longer being a party to the accord. In their recent analysis, the brokerage firm found that technology is steadily driving down the price of these energy sources to the point that market functions will eventually make renewable energy an equitable possibility for large-scale power.
“We project that by 2020, renewables will be the cheapest form of new-power generation across the globe,” Morgan Stanley analysts said in a report published last Thursday. According to the report, the US is to exceed the Paris commitment of a 26-28 percent reduction in its 2005-level carbon emissions in the next three years. The report points out that better understanding of wind conditions and redesigned wind-turbine blades have made wind power an increasingly viable power option.
Many in the environmentalist community will point to the cost reduction as an argument in favor of maintaining the United States position in the Paris Climate Agreement, and for continued subsidization of green projects. However, we believe that if true, these statistics render the continued government subsidization of green projects completely superfluous. The goal of green energy projects should be to achieve competitiveness based on the merits of the technology, not financial support as an “approved power source” from the government.
The United States’ exit from the climate treaty has been treated as an environmental calamity by supporters of renewable energy, pointing to German Chancellor Angela Merkel’s steadfast support for the treaty as a roadmap for the US to follow. Interestingly, the math doesn’t favor that argument. The U.S. actually reduced its overall greenhouse emissions at a faster rate than Germany over the last decade. American emissions fell by 9.9 percent between 2005 and 2015, as compared with Germany’s 8.8 percent, even though the U.S. was not a signatory to any carbon emissions treaty during that period.
FBAE believes that it is critical for the United States to be judicious in the extent to which it tethers itself to the climate goals of other nations. Climate treaties place an undue burden on the American economy, and in the case of reducing carbon emission is proving to be unnecessary.
President Trump has designated the last week of June as “Energy Week”. Policy weeks have become a trademark of the Trump presidency, and for family businesses, the consequences of this Energy Week could be welcomed by many who are plagued with volatile energy costs. The common thread of Energy Week will be a renewed reliance on traditional energy sources, and dominance of U.S.-based fuels in the export market. The reversal of Obama-era energy policy was a key tenant of the President’s campaign, and based on his Energy Week schedule, Trump aims to make good on that promise. Now, Trump is looking forward, forging actionable plans to shape America’s energy future. In his first 150 days, the president has used his executive power to lift regulatory barriers to domestic energy production and has empowered the Interior Department to begin revisions of Obama-era fracking regulations.
The President has been outspoken on reducing regulations, providing greater access for energy extraction purposes, and encouraging energy production to help lower the cost of our energy production needs. While specifics on the President’s Energy Week plans are scarce, it is known that he will discuss oil and natural gas exports with Indian Prime Minister Narendra Modi when he hosts here today at the White House. On Tuesday, EPA Administrator Scott Pruitt will appear before a Senate Appropriations subcommittee where he will deliberate on the President’s spending blueprint. Energy Secretary Rick Perry will likely offer a preview of some of the President’s priorities when he speaks Tuesday with analysts and executives at the U.S. Energy Information Administration conference in Washington – agenda here. On Wednesday, President Trump will meet with Governors and Native American tribal leaders along with Energy Secretary Rick Perry. This meeting will precede a Thursday panel in the House Natural Resources Committee that will explore energy industry access to federal lands – link here. Finally, the President Trump will host and event at the Energy Department on Thursday where he will focus on how the sale of U.S. natural gas, oil, and coal helps strengthen America’s influence globally.
While President Trump is expected to place his policy focus on traditional energy sources, he is expected to describe openings for other energy exports, including U.S. technology that harnesses power from the wind and sun, and a new generation of advanced and modular nuclear reactors. Many in the industry have argued that the licensing rules for new reactors are cumbersome and convoluted, discouraging investment in an inexpensive and environmentally friendly energy source. There are hopes that President Trump will eliminate these hurdles.
In addition to making it easier to produce traditional forms of energy, the Bureau of Land Management is currently finalizing environmental reviews to allow leasing of federal land for the purpose of installing solar energy collectors in Nevada. The Dry Lake region on Nevada could be the first federal land installation of solar power generation in the country.
Streamlining the energy permitting process and reducing regulations will drive down costs, which is welcomed news for many family-owned and operated businesses with tight margins. FBAE is hopeful that the changes highlighted during Energy Week will lift the burden that stifles job creation and holds back our economic recovery.
By Alex Ayers
Recently rooftop solar panels have been promoted to Alabama residents as a way for energy consumers to lower their electrical bills, however there are still many risks involved that oftentimes may outweigh the benefits.
Rooftop solar panels have increased in use in recent years, 18 gigawatts of solar photovoltaics were installed between 2008 and 2014 nationwide. At this growth rate rooftop solar will play a part in supplying American consumers with electricity in the future, and Family Businesses for Affordable Energy promotes diverse energy sources because competition helps to keep energy prices affordable.
However, if growth continues before hidden costs are dealt with, it has the potential to have major impacts on the affordability of electricity for family businesses and households.
The largest growth in rooftop solar panels has come from states that mandate the price that consumers are paid to sell excess solar energy back to the grid through a policy known as net-metering. Alabama solar users currently can sell their excess power to their utility company when they are not using all of the generated power themselves at market rates instead of state mandated rates. The rates at which utilities pay consumers for the electricity vary by state, but those states that mandate retail prices shift the cost burden of maintaining the grid away from solar users to non-solar consumers. This increases the cost of electricity on low-income users and renters who cannot afford or are not allowed to install their own rooftop solar panels.
For non-solar consumers in Nevada this means an increase of $600 per year to subsidize rooftop solar users. In states where net-metering is poorly regulated it creates a regressive income transfer from those who cannot afford solar to those who can. For utilities that transfer the costs from households to commercial customers, the increased overhead cost is passed on to the consumer through increased product prices, either way consumers lose out in poorly regulated net-metering schemes.
Alabama has so far successfully stayed away from these regressive policies, buy could see pressure to change in the future.
As rooftop solar becomes more popular, it opens up the market to bad actors that try and take advantage of consumers interested in lowering their electrical bills. For consumers leasing solar panels there are often hidden costs associated with maintenance and upkeep of the panel that are not easily identifiable in the the leasing agreement.
Some companies require lessees to contract with another company to clean and maintain the panels at costs of up to $700 per year. With long-term leases of 15-20 years these requirements significantly increase the payback period of the solar panels. The leases also make moving more difficult as the leaseholder can put a lien on the entire property claiming it is necessary to protect the solar panels. Additionally, installing solar panels can increase the assessed value of the home and therefore increase the property taxes paid by the consumer.
In addition to hidden costs, some bad actors have used solar installations to scam consumers. In 2015 an Arizona judge released more than 1,000 customers from their leases from a predatory company that failed to install nearly three-quarters of the units and withheld state payments owed to customers.
In other states predatory companies can install panels claiming the cost to the homeowner will be significantly lower than buying electricity from the utility company, but when utility rates remain steady, the rates charged by the solar installer increase over time costing the homeowner more than if the panels had never been installed. As solar becomes more popular, stronger consumer protections will be needed to stop predatory companies like these.
Recent improvements in efficiency and decreasing costs of production will make rooftop solar an ever larger producer of electricity in America, however Alabama lawmakers should stay vigilant in future policymaking to ensure that the hidden costs are not shifted to non-solar users, especially low income consumers who cannot afford higher electric bills. Smart policies can protect all consumers and help make energy more affordable.
Alex Ayers is the executive director of Family Businesses for Affordable Energy (FBAE). FBAE launched the Make Solar Safe initiative for consumers and policymakers to better understand how to protect solar power customers from predatory companies, unsafe construction, and other hazards.
By Christopher Ortiz
New Mexico has benefited from its renewable energy production tax credit, which has supported more than 11,000 jobs and represents $1.6 billion in economic activity, according to a new report.
The report, released by Family Businesses for Affordable Energy this week, says the state has established has “a robust renewable energy generation sector with enormous potential for growth” and clean power is a wise investment for New Mexico. The credits are set to expire next year.
Over 13 years, $120 million in renewable energy production tax credits have been claimed. New Mexico has seen 13 commercial wind facilities with a capacity of 1.1 gigawatts and 46 solar photovoltaic facilities with a capacity of 452 megawatts come online. According to the report, power producers that have taken advantage of the renewable energy production tax credits have spent $1 billion in the state constructing, equipping, operating and maintaining 31 generation facilities. For every $1 in state tax expenditure, these projects generated $5 in labor income, the report claims. The report points out that the tax credits are not the only factor considered in where and when renewable energy facilities are built.
According to the Santa Fe New Mexican, proposed legislation would extend the renewable energy tax credits through 2023. The legislation would also raise existing caps on the amount of renewable energy production eligible for the credits.
O’Donnell Economics and Strategy prepared the report for Family Businesses for Affordable Energy, which says it supports policies that lower energy prices for small businesses. Data for the report came from the New Mexico Energy, Minerals and Natural Resources Department. A 2015 report from the same department found that for every 14 cents in tax expenditure, renewable energy production tax credit projects generated $1 in labor income.
Family Businesses for Affordable Energy (FBAE) today announced a new economic impact study, finding that New Mexico’s solar/wind tax credits have created more than 11,700 jobs, $1.6 billion in economic activity and more than $600 million in new labor income.
The FBAE analysis estimated the economic impact of New Mexico’s Renewable Energy Production Tax Credit (REPTC) and now represents the most current research on the subject. The REPTC, originally implemented in 2003, is a credit against New Mexico personal or corporate income tax that is available to companies that produce electricity from renewable resources for commercial sale.
“These tax credits are a phenomenal success for New Mexico,” said Palmer Schoening of the FBAE. “Taxpayers are getting a huge return on their investments in clean energy – new jobs, new investments, new economic activity –while reaping the additional environmental benefits that come from clean energy. This is a win-win-win situation for taxpayers, consumers, and businesses throughout New Mexico.”
Findings of the study include:
- A total of $120 million in Renewable Energy Production Tax Credits have been claimed over the past 13 years. During that time, New Mexico has made significant progress in developing its wind and solar power capacity, gaining 13 commercial wind facilities with nameplate capacity of 1.1 gigawatts and 46 solar photovoltaic (PV) facilities with nameplate capacity of 452 megawatts.
- During that time, REPTC-certified power producers have spent over $1 billion in New Mexico to construct, equip, operate, and maintain 31 generation facilities. Expenditures by REPTC-certified power producers have supported 11,771 full and part time jobs, $611 million in employee compensation, and $1.6 billion in economic activity statewide.
- For every $1 in state tax expenditure, REPTC-certified projects generated over $5 in labor income.
- These economic impacts have generated state and local tax revenue totaling $74.6 million and averaging $6.8 million annually.
Palmer called for the extension of the REPTC, an extension that will lead to more new jobs and investments, while helping to lower the cost of energy for families and businesses. The REPTC is set to expire January 1, 2018. A bipartisan bill (HB440 and SB432) changes and temporarily extends the program. The goal: to support continued investments in New Mexico while also adjusting the tax credit itself to better reflect the decreased costs of building renewable energy facilities.
In addition, the bill provides a more appropriate end date for the program, phasing out the production tax credit by 2023—as opposed to ripping the rug out from under companies already invested as well as the ones on the waiting list.
“New Mexico has made great progress in renewable energy since implementation of these tax credits,” he said. “Our study proves beyond any doubt that for every dollar you invest, New Mexico gets $5 dollar back in labor income, thousands of new jobs and billions in new investment. Solar and wind done right reaps great benefits for New Mexico, and New Mexico has been doing it right.”
O’Donnell Economics and Strategy conducted the study. Kelly O’Donnell is an economist and research professor at the University of New Mexico Institute for Policy, Evaluation, and Applied Research. Her specialties include regional economic development, economic impact analysis, and state fiscal policy. Prior to academia, Dr. O’Donnell held a series of leadership roles in New Mexico state government including Director of State Tax Policy, Deputy Cabinet Secretary for Economic Development, and Superintendent of the New Mexico Regulation and Licensing Department. She holds a PhD in Economics from the University of New Mexico.
O’Donnell can be reached at 505-659-5702 or [email protected].
Schoening can be reached at 202-787-1399 or [email protected]
Family Businesses for Affordable Energy (FBAE) today called for the extension of the New Mexico Renewable Energy Production Tax Credit (REPTC), an extension that will lead to more new jobs and investments, while helping to lower the cost of energy for families and businesses.
With this simple incentive, New Mexico already created thousands of jobs with billions in new investments. According to a recent study commissioned by the NM Energy, Minerals & Natural Resources Department, the tax credit created over 9,000 jobs, $430 million of labor income, and reductions in electricity costs—numbers that significantly exceed the fiscal cost of the tax credit.
Conservative estimates are that there is $1.5-$2 billion worth of investments on the current solar waiting list alone. This could translate into 7,000-9,000 new jobs for New Mexico just waiting for the tax credit extension.
“New Mexico should continue to invest in its energy infrastructure,” said Alex Ayers, Executive Director of FBAE. “Taxpayers will get a huge return on new jobs, new companies, and projects that are already in the pipeline, just waiting to get started if this credit is continued. We cannot allow these potential jobs to just be thrown away or to leave New Mexico for other states with tax credits.”
“These tax credits are good for family businesses, good for taxpayers and good for the New Mexico economy,” he said.
In 2002, New Mexico expanded its renewable energy sector, bringing jobs, investments and sustainable energy into the state. To help spur private investments, the legislature implemented the REPTC—a tax credit available to energy companies who generate electricity from renewables, such as solar arrays and wind turbines.
This incentive program is set to expire January 1, 2018. A bipartisan bill (HB440 and SB432) changes and temporarily extends the program. The goal: to support continued investments in New Mexico while also adjusting the tax credit itself to better reflect the decreased costs of building renewable energy facilities.
In addition, the bill provides a more appropriate end date for the program, phasing out the production tax credit by 2023—as opposed to ripping the rug out from under companies already invested as well as the ones on the waiting list.