The Connecticut State Senate will be considering a bill on Wednesday, SB 1138, which could actually have a beneficial impact on high electricity rates. The legislation will allow large-scale hydroelectricity to be considered as part of the renewable portfolio standards in the state.
Not surprisingly, there are a whole host of opponents lining up to try to lobby to kill the idea. They would rather the ratepayers of Connecticut, whether those that are customers of the utilities or those that are getting power from competitive suppliers, pay more for electricity.
One of the biggest opponents of the bill is the New England Power Generators Association (NEGPA), a trade association representing independent generators in the region. Most of the members sell their power on the wholesale market and with cheap natural gas prices have been able to make a lot of money over the past few years. We support 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 would provide a hedge against rising natural gas prices and further diversify our electricity generation, which according to ISO-NE has become too reliant on natural gas.
Hydroelectricity is one of the oldest forms of power generation and was among the earliest forms of energy for sawmills and textile mills. It is also a form of renewable power that relies on the flow of water to generate electricity. When Connecticut formed its renewable power standards it drew an arbitrary line between small-scale and large-scale hydro power. The generating capacity of facilities should not be a criteria for eligibility. While renewable portfolio standards create the undesired effect of raising electricity rates (due to their focus on subsidizing expensive forms of power and forcing the utilities to purchase it) there is now an opportunity to fix a past mistake by having the legislature pass and the governor sign SB 1138. We would further suggest eliminating the class carve-outs within the RPS, which would force renewable electricity generators to compete with each other—which will reduce electricity costs to ratepayers. RPS is bad for ratepayers and it should be eliminated, but until that happens we should embrace any chance we get to mitigate the damage done to ratepayers by RPS.
Ironically, the NEPGA has been opposing the bill because it “subsidizes” hydro power and “picks winners and losers”, but what NEGPA won’t mention is that many of its members have forced expensive forms of electricity on the market through the renewable portfolio standards. Those expensive forms of power will be less attractive if there are cheaper forms of renewable power like large-scale hydro. In addition, if there are large, reliable, safe inexpensive forms of power that enter the region the NEGPA members profits in the wholesale market (from natural gas generation) will be reduced. Ratepayers will benefit by the passage of SB 1138 and the generators know it.
What will be the impact of this legislation? As a guide we can look to Vermont, a state that allows large-scale hydro power to be included as part of its renewable goals. They still have a broad portfolio of electricity choices–from nuclear to wind to natural gas and solar. The electricity market in Vermont is no less dysfunctional than any of the other states in the region that have government interfere with market pricing. Not surprisingly, Vermonters pay roughly two-and-a-half cents less per kilowatt-hour for their electricity than the residents of Connecticut.
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 the 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.
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 Monroe Courier.)