Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
As part of comprehensive legislation to raise energy prices, the Senate is once again considering proposals to set a renewable portfolio standard (RPS) for electric utilities. Such a requirement would raise electricity prices for consumers and industry, but would negatively affect some regions of the country much more than others. As the Bush Administration Statement of Policy June 12, 2007 correctly states:
“A limited Federal RPS would result in higher electricity costs for consumers in areas where renewable resources are less available and could place new strains on electricity reliability needs.”
Although 21 states have already passed an RPS, this is not an argument in favor of a federal RPS. These RPS states tend to have a much higher potential for renewable energy and/or less energy-intensive manufacturing. In the RPS states that do have considerable manufacturing, the effect of adopting an RPS has been to raise electricity prices and push manufacturing into states or other countries with lower electricity prices. Therefore, the effect of a federal RPS would be to require states with low electricity prices and proportionately lower renewable energy potential, such as is found in our industrial heartland, to raise electricity prices to a level that would force their industries to migrate overseas to countries with cheaper energy rates and no renewable portfolio standards.