Renewing our sensibility

Americans unquestionably are eager for all industries to introduce more green energy into all that we do, and electric utilities share in that enthusiasm. Utilities from coast to coast are steadily integrating electricity generated from the wind, the sun and other renewable sources into the power they deliver to customers.

Still, these renewable sources comprise a very modest part of the U.S. electric generation portfolio — slightly less than three percent, in fact. That is just one reason the House of Representatives should reject an amendment expected to surface this week that would require most utilities nationwide to provide 20 percent of their electricity from renewable sources by 2020.
That amounts to a roughly 600 percent jump, and in less than 13 years. Such a mandate, or renewable portfolio standard (RPS), will raise power bills for many consumers and create new challenges for maintaining reliable electric service. This is not a sound energy policy.

Of course, everyone wants to use the sun and the wind to make electricity, and our industry is responding. Every U.S. utility with available resources is working diligently to add renewable resources to its generation portfolio, and some companies may well meet or exceed the proposed federal goal.

In fact, 24 states and the District of Columbia now have some form of RPS in place, each prescribing a varying mix of targets, timetables and fuel choices, depending on what works best for them given their available resources. The proposed federal RPS would conflict with every single one of the state laws, in one way or another.

Some states enjoy a rich abundance of renewable energy sources, including solar energy, geothermal, and vast tracts of windswept desert, but many other states have a distinct paucity of renewable energy resources.

Under the proposed amendment, if utilities cannot generate their own renewable resources, they must buy renewable power from other generators or, more likely, simply write out a check to the federal government to cover the difference. In either outcome, the costs for electricity will be higher, and these costs will be passed along to the customers at a time when overall costs for energy are rising already.

There are other drawbacks to a federal RPS that will impact cost and reliability. Wind and solar energy, of course, are intermittent and do not contribute significantly to electric capacity or reliability. Retail electricity suppliers cannot tell consumers that they will receive electricity only when the wind blows or the sun shines.

Utilities will still need to build generating facilities using conventional fuels—most likely expensive natural gas — to meet consumers’ needs for reliable power on short notice, as well as to support their intermittent renewable energy resources.
Often overlooked, too, is the challenge of building the new power lines that will be needed to connect wind energy and other renewables from remote areas to population centers, for example. This is a difficult and costly process.

House lawmakers do have a very viable “green” alternative to an RPS — they can provide long-term tax incentives to accelerate deployment of renewable energy sources. Unlike a federal RPS mandate, tax incentives for renewables are the most direct and efficient way for the federal government to spur the development of renewable energy resources. The renewables production tax credit (PTC) and the investment tax credit (ITC) for solar and geothermal energy are proven means of actually getting renewable generation built and brought online.

All of us want to put more renewables into our electricity supply. But instead of enacting a top-heavy federal mandate, let’s give the states the lead on whether and how to create renewable targets.


Kuhn is president of the Edison Electric Institute, a Washington-based association of investor-owned electric utilities.