Renewable Energy Mandates Don’t Lead to Higher Electricity Prices

Republicans in Montana, Colorado, Minnesota and Missouri are not only hoping to convince their states to exit regional carbon trading programs; they would also like to eliminate states’ Renewable Electricity Standards (RES). These standards require utilities to source a certain percentage of their energy from clean energy sources.

About 30 states have passed laws that mandate RES; the policy is of utmost significance to the forward progress of renewable energy in the US.

Now, with many of those states facing budget crises, many Republicans are seizing the moment as an opportunity to question the value of RES.

They are scrutinizing the costs of renewable energy policies and how they affect electricity rates.

So far, studies find – and utilities confirm – that RES mandates do not significantly impact electricity prices.

The estimated impact on electricity rates is a fraction of a percent in most cases and just over 1 percent in two states, Connecticut and Massachusetts. A 2009 study by the U.S. Energy Information Administration modeled the potential impact of a 25 percent nationwide renewable electricity standard. Overall, it projected no impact on rates through 2020, followed by a less than 3 percent increase by 2025. Still, there’s room for more study, and in some states, there remains relatively little data about the ratepayer impact of renewable policies.

In 2008, DOE’s Lawrence Berkeley National Lab released the results of a study that analyzed RES in 12 states that implemented it before 2007. In most cases, electricity rates rose by a fraction of a percent, and never higher than 1%.

In 2009, the U.S. Energy Information Administration (EIA) released a study that looked at the potential impact of a nationwide RES that required 25% percent renewable electricity. It also found there would be no difference in electricity rates through 2020.

This is particularly true since the cost of renewables such as solar and wind continue to fall, while the cost of fossil fuels continues to rise. It may turn out that those states with RES have reduced electricity prices compared to those that don’t.

Xcel Energy notes that adding renewable energy to its mix has also reduced its environmental regulatory risk, and that diversifying its power sources is a good way to protect customers against oil and natural gas rate increases.

And there are obvious environmental and green job creation benefits.

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