You are here

Multi-billion dollar RPS wealth transfer

The U.S. Energy Information Administration has just published an analysis of Sen. Jeff Bingaman's (D-N.M.) "renewable portfolio standard" (RPS) plan requiring utilities by 2020 to generate 15 percent of all the electricity they sell from renewable sources. Bingaman is crowing that EIA's analysis shows the RPS would produce only "slightly higher electricity expenditures (0.5 percent) by 2030," offset by "lower coal and natural gas prices." That is correct but EIA's description of the same facts reveals another less attractive side to those numbers:
With slightly higher prices, EIA projects that cumulative consumer electricity expenditures from 2005 through 2030 will increase by 0.5 percent ($21 billion) with the RPS compared to the reference case, despite slightly reduced sales. Reduced demand for natural gas results in lower natural gas prices, and cumulative end-use natural gas expenditures are reduced by 0.2 percent ($3.3 billion) of the reference case total. Net cumulative consumer expenditures for natural gas and electricity are increased by about 0.3 percent ($18 billion) through 2030 compared to the reference case [p. 8].
$18 billion is not chump change. It is a hefty wealth transfer from myriad energy users to a favored few energy producers. Naturally, the winners in this cozy little game of regulatory piracy will reward the likes of Bingaman with fat campaign contributions. Too bad the EIA cannot analyze the costs to democratic accountability of energy pork like Bingaman's RPS.