Day: November 27, 2013

It’s Time for Renewable Energy to Stand on Its Own Legs

The Energy Trust of Oregon (ETO) is a non-profit organization that carries out energy efficiency activities on behalf of PGE, Pacific Power, NW Natural Gas, and Cascade Natural Gas. ETO also subsidizes the above-market cost of small, renewable energy projects. For 2014, ETO proposes to spend $178.9 million while taking in revenues of $163 million. Revenues are derived from monthly surcharges on the bills of utility ratepayers. The state legislature authorized the imposition of these surcharges (ranging from 3% to roughly 6%, depending on the utility and the year) in legislation adopted in 1999.

ETO’s budget is available for public review and comment (www.energytrust.org) through the end of November 27, 2013 and will be approved by the ETO board in December. Cascade President John A. Charles, Jr. filed the following comments with with Margie Harris, Executive Director of the Energy Trust of Oregon, on November 27:

Dear Margie,

I have listened to your budget presentation twice and also attended the most recent Renewable Energy Advisory Committee (REAC) meeting. Based on those observations I have one suggestion for the 2014 budget/action plan:

Consider shifting the emphasis for renewable energy subsidies away from intermittent sources. Since 2003, ETO has supported the development of 5,217 renewable energy projects of 20 MW or less. Almost all of these projects―99.6%―have been solar and wind, the two most expensive categories. Yet, because these technologies fail to produce any electricity most of the time, wind and solar projects have only accounted for 40.5% of the power generated by all ETO projects.

Not only has the ETO renewable program had high costs with low power output, most of the alleged social benefits of these sources don’t exist because the random failure of wind and solar means that the system operator for the regional grid has to maintain ever-growing amounts of spinning reserve. These back-up sources have adverse environmental effects that are not accounted for by the recipients of ETO subsidies. In essence, wind/solar project owners internalize the benefits of ETO subsidies while externalizing the costs of grid reliability.

In your 2014 draft budget, you propose to spend $9.9 million on solar projects to get 0.9 aMW of power, at a levelized cost of 10.4 cents/kwh. This is roughly triple the cost of your other renewable projects. I don’t think this is a good deal for ratepayers, and it’s not a good deal for the grid.

The “final frontier” for ETO should be to invest in renewable projects that produce reliable, dispatchable electricity. The regional grid craves stability; wind and solar create volatility. This is a fundamental system conflict, and ETO should strive to be part of the solution by terminating future subsidies for intermittent sources.

At the last REAC meeting, someone on your staff noted that solar projects are proceeding even without the Business Energy Tax Credit (BETC) [repealed by the Oregon legislature in 2012] due to declining solar costs of some 40% over the past 4 years. This should not be surprising if you understand the term “co-dependent.” In technological development as well as human interaction, when we stop rescuing people from their own failures, they tend to become self-reliant a lot faster. I’d suggest that after subsidizing 5,000 solar projects, it’s time for ETO to declare victory and move on, allowing this industry to stand on its own legs.

Sincerely,

John A. Charles, Jr.

Cascade Policy Institute

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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The Story Behind Thanksgiving That Every Elected Representative Should Know

The quintessential American holiday, Thanksgiving evolved from the Pilgrims’ celebrations to thank God for the harvests that saved Plymouth Colony. What most people didn’t learn in school is that nearly half the Mayflower Pilgrims died of starvation because many refused to work in the fields.

Plymouth Colony originally had a socialist economy. Land and crops were held in common. In the words of Governor William Bradford, “the young men who were most able objected to being forced to spend their time and strength working for other men’s wives and children without any recompense.” Collectivism incentivized colonists needlessly to rely on the efforts of others. Realizing this, Governor Bradford assigned each household its own plot of land. Families could keep what they produced or trade for things they needed. The result was a bountiful harvest in 1623.

Instituting private property and respecting the autonomy of the family unit caused Plymouth to survive. Collectivism and central planning produce scarcity. Private property, free markets, and personal responsibility lead to prosperity and plenty. And a healthy economy, with strong and independent families, enables a community to help those who genuinely need assistance. All are important lessons for America today from William Bradford’s first Thanksgiving.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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