Under a new name, the same old ruse

Back in 2013 I wrote about a company called Ethical Electric, noting that the electricity supplier was charging a premium to help out progressive causes. Well, the other day I received a solicitation from a group called Clean Energy Option and after a little digging I found out it was Ethical Electric that was doing business as (d/b/a) Clean Energy Option. Seems to be less than ethical to change their name, but it’s likely a marketing thing.

Yet thanks to that 2013 piece I wrote for Watchdog Wire, I found out that Ethical Electric was charging 10.14 cents per kilowatt-hour (kWh) at the time, which was a fair-sized premium over the 8.89 cents per kWh Delmarva Power (my utility) was charging back then. That 14% difference meant the average bill would be about $12.60 higher per month for an average home that used 900 kWh monthly. I don’t know about you, but I’m sure I would cry foul if my electric bill was going up $150 a year, since that’s what it translates to.

It just so happened that the Clean Energy solicitation followed my latest Delmarva Power bill by a couple days so my bill was handy. Over the last two-plus years, my Delmarva Power rates haven’t changed a whole lot as the “rate to compare” was 9.01 cents per kWh. In 2 1/2 years I’ve endured an annual rate increase far less than 1% as the total hike was 1.35%. (I also found out in researching this piece that I can get even lower rates by switching my supplier to another of several companies that are in that business. Some are “green” companies like Clean Energy Option, most are not.)

On the other hand, the teaser rate for Ethical Electric’s Clean Energy Option has swelled to 11.6 cents per kWh, which is a rate hike of 14.4% overall and about 6% per year. Most likely this rate will jump again after the three-month special rate ends – after all, what business would promote a higher initial cost? The premium that was once 14% has now doubled to 28%, despite the fact people are bending over backwards to install new solar farms and wind turbines around the region. As Clean Energy Option euphemistically puts the answer to the question “What will happen to my electricity bills?”:

In short, supporting new renewable energy development costs a little more than delivering polluting energy. That’s because the energy you are choosing is better for you and the planet.

(“Better for you” may not be true for a person within sensing range of the low-frequency sound emitted by wind turbines, but I digress.)

There’s obviously something at work here to drive the cost of “regular” electricity down while wind and solar continue to increase. I suspect that something is the low cost of natural gas, which is used more frequently as an energy source to create electricity and is relatively cheap. Ironically, this economic fact is doing almost as much damage to the coal industry as Obama’s EPA regulations.

So don’t be fooled to the tune of $23 a month or nearly $280 a year. Keep the money in your pocket and stick with what is most reliable. Or, if you really want to put that money to work, use it to support elected officials who will stand up to the environmentalist lobby and remove these silly mandates and carveouts for the otherwise unsustainable green energy racket.

Twisting in the wind

No, I’m not talking about a political figure today. Instead, I received an e-mail from the American Wind Energy Association telling me about the state of the wind industry and how its costs are falling rapidly. (This blog post at Into the Wind, the AWEA blog site, has the same information.)

If you look at points 1 through 4, they make varying amounts of sense. With the maturation of the market, it’s no stretch to assume that costs would go down just as they would for any technology. Personally, though, I disagree with the premise that additional carbon emissions are necessarily bad, particularly when the idea is to blame them for climate change. Nearly two decades of steady temperatures combined with the increasing emissions seem to me a fairly good testament that increasing emissions aren’t the problem.

It’s point number 5 that’s the payoff for me, because I knew it would be coming sooner or later.

5. Policy support is still essential for the U.S. to keep scaling up renewable energy

The Lazard study also highlights the need for clear, long-term policy support for renewable energy. While projects located at some of the best wind resources in the country are now cost-competitive, it notes that this is still not the case in most regions. The most recent expiration of the Production Tax Credit (PTC) resulted in a 92% drop in new wind projects from 2012 to 2013.

The PTC helps correct for flaws in our electricity market design that do not value wind’s benefits for protecting the environment and consumers. Wind energy creates billions of dollars in economic value by drastically reducing pollution that harms public health and the environment, but wind energy does not get paid for that even though consumers bear many of those costs.

Wind energy also protects consumers from price increases for fuel, but that is not accounted for in the highly regulated electricity market because other energy sources get to pass their fuel price increases directly on to consumers who have little choice in the matter.

Policies like the PTC correct for those market failures to reach a more efficient market outcome. The PTC has expired, however, for any project not started by the end of last year. An extension is now urgent to avoid shutting down the U.S. manufacturing base, and to ensure that more wind farms are built so that more consumers can benefit from these record low prices.

Yet what if the lack of subsidy isn’t a market failure as they describe? In the original blog post there’s a graphic which shows that every time the tax subsidy is cut, the amount of wind capacity installed plummets. Between that subsidy and the various renewable portfolio standards enacted by many states (including Maryland) it seems to me they artificially prop up the wind energy market, which can’t stand on its own otherwise. This approach is the same argument which posits a carbon tax is necessary because fossil fuel users aren’t paying for the supposed destruction of the environment and public health they create, but discounts the increased standard of living brought on by the usage of reliable sources of electricity to, among other things, improve public health.

Another thing worth pointing out about these studies and reports is that they look strictly at land-based wind turbines. While they are falling in price, researchers around the world are finding that residents nearby are complaining about a litany of health issues derived from the constant noise. Naturally, naysayers would contend that other methods of power generation, such as fracking, also have ill effects but these are anecdotal as well.

So while offshore wind would seem to be a solution, the cost is far more prohibitive. Maryland’s 2013 offshore wind bill, for example, subsidizes the effort through both an increase in the required renewable energy portfolio and $1.7 billion in direct subsidy over 20 years, parceled out as an $18 annual surcharge to residential consumers and a 1.5% hike for businesses. (A business paying $1,000 a month, such as a restaurant, would have to add $180 a year.) Naturally this doesn’t take into account the penchant for our General Assembly, once a new tax or surcharge is enacted, to declare it’s not enough and raise the tariff accordingly. I give it no more than 5 years before someone demands to raise the fee to $30 or $40 annually and hike commercial users up to a 2% or 3% a month surcharge just to keep the business in Maryland’s waters.

It would seem that wind power is a logical way to create electricity in certain locations and situations, but for general use it has the drawback of not being as strictly reliable as fossil fuels are. The fact that we have to create a renewable energy portfolio tells me that the market has otherwise spoken.

We really haven’t heard about this as an issue for the 2014 election, but I would presume the Brown administration would continue on this path as they promise to:

Expand our renewable mix with investments in (read: subsidies for) Maryland-based solar and wind, which can both create new jobs and reduce air pollution that affects the health of everyday Marylanders.

It would be my hope that Larry Hogan would revisit this effort, backing legislation to eliminate this expensive renewable energy portfolio and repealing the prospect of higher electricity rates come 2017 – at the very least, recast this scheme as an opt-in program just like consumer choice has already created with companies like Ethical Electric, which I wrote about last year. Let the market decide how much it wants to support the renewable energy boondoggle, and how many of us simply crave the reliability of knowing that when we flip the switch, the light will turn on.

Move on to a new energy supplier

Under a slightly different title (the above was my original submission), this is my latest for Watchdog Wire.

Electrical customers throughout Maryland may be receiving – or perhaps have already seen – a solicitation for switching their electrical service from their current utility to a relatively new player in the industry called Ethical Electric. I received a solicitation last week, with the message:

As a Delmarva Power customer, you now have the option to ensure that every kilowatt of electricity used in the Swartz home comes from clean, renewable sources.

As I read on, I learned that a large portion of my electricity comes from dirty, supposedly finite sources.

(continued at Watchdog Wire…)