Last week the Connecticut State Senate passed SB 1138, which would potentially add large-scale hydro to the state’s Renewable Portfolio Standard—replacing more expensive wind, solar and biomass. If incorporated, it is expected that customer costs will be reduced by millions of dollars annually, compared to the current system. Despite that, many are up in arms over the bill’s passage.
Why all the commotion over this provision? Unfortunately, it is simply a matter of protecting market share and profits by those benefiting from the status quo. This sentiment was on display in a recent Hartford Courant column by New England Power Generators Association (NEPGA) President Dan Dolan. In an effort to protect the interests of the large national and multi-national energy firms that make up his organization’s membership, Mr. Dolan’s comments ran the gamut of downright false to just plain ridiculous.
Claims that SB 1138 “subsidizes” large scale hydro, shifts jobs out of state, and will impact the competitive retail energy market are pure fiction and meant to scare policymakers from making meaningful changes to RPS laws that are clearly not functioning as intended. SB 1138 contains no subsidy, credit, or additional revenue stream for large-scale hydro. The legislation calls for a competitive bidding process for up to 5 percent of the state’s renewable energy goals only if the state cannot find those resources within its borders. Essentially, it’s an insurance policy to protect consumers from having to pay “compliance payments” in the event renewable energy goals cannot be met. There is no subsidy in that. In reality, it is NEPGA producers that profit from RPS mandates at the expense of ratepayers.
Most NEPGA members sell their power on the wholesale market, and with low natural gas prices have been able to make significant profits over the past few years. We applaud the fact that the changing market enables generators to bring inexpensive and reliable power to the region, lessening the burden on businesses and families. What is unfortunate is that this industry group, like so many industry groups, is fighting to keep other safe, reliable and inexpensive power out of the region in order to limit competition. Adding large-scale hydro to our energy mix provides a hedge against rising natural gas prices and further diversifies our energy generation, which according to ISO-NE has become too reliant on natural gas.
What will be the impact of this legislation? As a guide we can look to Vermont, a state that allows large-scale hydro to be a part of its renewable goals. They still have a broad portfolio of electricity choices—from nuclear to wind, natural gas and solar. But the additional flexibility and competitive mix of supply in the state results in Vermonters paying roughly two-and-a-half cents less per kilowatt-hour for their electricity than the residents of Connecticut.
The claim that this legislation will drive jobs and consumers’ dollars outside of Connecticut also rings false. Connecticut ratepayer dollars are already leaving the state at a clip of 89 percent! And according to the Department of Energy and Environmental Protection (DEEP), the out-of-state biomass facilities currently supplying Connecticut with renewable energy are among the least “clean” renewable resources.
Additionally, the suggestion that allowing large-scale hydro to qualify for RPS under a competitive bidding process could somehow impact the competitive electricity market and the retail choice options currently available to customers is simply without merit or a factual basis. The simple fact is that the RPS reform bill is intended to help the state meet its goals in a cheaper fashion, which will benefit all electric customers. It has no impact on a consumer’s ability to choose an energy supplier.
Renewable power standards were designed to encourage the use of renewable resources over traditional forms of energy generation regardless of the impact on ratepayers. Elected officials and bureaucrats preferred to pick winners and losers based on their preferences and not the preferences of consumers or the electricity market as a whole. If Connecticut is going to continue to impose renewable energy standards and artificially raise the cost of electricity, then they should eliminate the arbitrary lines and include large scale hydro in the mix.
Special interest industry groups like NEPGA will always seek to protect themselves through burdensome legislation, but ratepayers deserve to have their elected officials enact policies that will lessen the impact of myopic regulations that pick winners and losers in the electricity market – and continually push electricity rates higher. Short of eliminating RPS, which should be our goal, this is the next best alternative. SB1138 will reduce electricity costs to ratepayers—and for that reason ratepayers and their representatives should support it.
Marc Brown is the Executive Director of the New England Ratepayers Association, a nonprofit dedicated to protecting ratepayers.
(A version of this column originally appeared in the Connecticut Post.)