![Racine County wind turbines](https://www.renewwisconsin.org/wp-content/uploads/2012/12/WaxdaleTurbines.jpeg)
Racine County wind turbines
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S.C. Johnson’s Waxdale Turbines |
Go wind, go!
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S.C. Johnson’s Waxdale Turbines |
Go wind, go!
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RENEW Wisconsin’s Michael Vickerman |
Starting next January, the price of purchasing renewable energy voluntarily through monthly utility bills will spike to all-time highs, thanks to recent decisions rendered by the Public Service Commission of Wisconsin (PSCW) on two popular “green pricing” programs.
The thousands of Madison Gas & Electric (MGE) customers participating in the utility’s Green Power Tomorrow program will see their premiums jump from 2.5 cents/kWh to 4 cents/kWh. That’s an increase of 60 percent. To translate this into dollars and cents, an average MGE customer consuming 500 kWh of electricity per month and subscribing at the 100 percent level will pay $90 more in 2013 for the same amount of renewable kWh sold this year.
Residential customers of Milwaukee-based We Energies (WE) will see an even larger percentage increase next year. In that utility’s rate case, the PSCW jacked up the premium paid by Energy for Tomorrow subscribers by nearly 73 percent, from 1.39 cents to 2.4 cents/kWh. Energy for Tomorrow has more than 20,000 subscribers.
Back in 1999, the year both programs were launched, MGE and WE customers paid an extra 3.33 cents and 2.04 cents/kWh, respectively, for the renewable energy they sponsored. Come January 1st, MGE and WE will likely share the dubious distinction of being the only utilities in the country offering renewable energy at a higher rate than they did in the 1990’s. So much for progress.
Adding insult to injury, renewable program subscribers will be subject to general rate increases approved by the PSCW this November. The utilities sought higher rates to recover the costs of retrofitting older coal-fired power stations with modern pollution controls. The fact that the renewable generators leveraged by program participants will never need pollution control retrofits is wholly disregarded in determining the size of the premium.
This is unquestionably a subsidy that flows from program participants to all ratepayers.
How did this happen?
Since 1999, renewable generation costs have tumbled, while productivity has improved.
A frustrated program subscriber might well ask: If base utility rates are going up, and the cost of renewable electricity is declining, why are premiums going up instead of down?
The short answer is that wholesale electricity prices have sagged in recent years, owing to a combination of unsustainably low natural gas prices, stagnant demand, and rapid expansion of wind power displacing higher-cost generation. In contrast, the price of renewable energy procured under long-term contracts held steady. When prices dropped in the wholesale market beginning in late 2008, the gap between system energy and renewable sources widened.
Though accurate, the above explanation is deeply unsatisfying, because the wholesale “market” is concerned about one thing only: the marginal cost of producing electricity into the grid. Nothing else matters, including the expenditures approved by the PSCW to reduce emissions from older generators. Even though retail customers wind up footing the bill for those upgrades, the wholesale market does not treat pollution control retrofits as marginal costs. Not one cent paid by ratepayers for these expenditures is reflected in the prices that renewable generators compete against.
The net effect of this disconnect is to artificially suppress the price of electricity from older and dirtier generators relative to newer and cleaner electricity producers. Real markets factor in the cost of upgrading and replacing capital equipment that manufacture the product bought by customers. What we have instead is an artificial contrivance that sacrifices long-term considerations like clean air, resource diversity and regulatory risk for the short-term reward of low prices.
Indeed, it would be difficult to design a more punitive market structure for renewables than the one we have at present.
‘Swimming up a waterfall’
Pricing renewable energy against a market operating in real time also undermines a valuable attribute of renewable energy, namely its inherent price stability. In this environment, the only way a customer can directly benefit from a fixed-price energy source like solar is to self-generate at his or her premises to reduce consumption of grid-supplied electricity.
In setting the premium size, the PSCW relied on pricing data at a time when the regional wholesale market was near its cyclical bottom. Electricity prices are now edging upward as forward prices of natural gas have rebounded from historic lows earlier this year. It’s a safe bet that wholesale electricity prices will continue to increase in 2013.
This sets up the very real possibility that WE and MGE will collect more revenue than is necessary to cover the cost spread between system energy and the renewable energy supplies servicing their customers. Unfortunately, the next time the base premium for each utility can be adjusted is January 1, 2015.
For at least a century now, fossil fuels have been the default resource option for most utilities. Against this institutional bias, switching to renewable energy is akin to swimming upstream. But given how far backward the PSCW bent to accommodate utilities’ continued reliance on coal and natural gas, quite a few renewable energy subscribers may balk at the prospect of swimming up a waterfall.
In fairness to MGE and WE, the price hikes approved by the PSCW went well beyond the incremental increases proposed by the two utilities. That’s because the agency relies solely on the wholesale “market” metric described above that filters out all societal benefits from the equation. To the agency, renewables are another source of electrons that deserve no special consideration. And, in reaching its decision, the PSCW disregarded the potential impact that abrupt price hikes might have on customer participation.
Programs outliving their usefulness?
A significant loss in subscribership would be a regrettable outcome if the programs were still viable vehicles for leveraging new sources of renewable energy. Sadly, that is no longer the case.
Earlier this decade, WE and MGE pulled the plug on a popular feature of their programs, specifically the special solar energy buyback rates that were funded with participant dollars. This innovation, which spurred the installation of hundreds of solar electric systems in their territories, succeeded in elevating MGE and WE’s stature while achieving the aims of their participating customers. However, when the utilities eliminated their solar incentives, they also removed the principal rationale for subscribing to their programs.
It seems quite clear that the current crop of voluntary renewable energy programs have outlived their usefulness. They are stagnating under a market structure that distorts and amplifies their true costs as well as a regulatory climate that greatly discounts their benefits to ratepayers. What were once dynamic vehicles for increasing supplies of renewable energy are now little more than feel-good marketing exercises running on autopilot. The value proposition to customers just isn’t there anymore.
There is nothing out there to prevent utilities from revitalizing their green pricing programs and making them useful once again. Such an undertaking, however, would require them to do something they haven’t done before: present an affirmative case for adding more renewables into their energy mix.
To do that effectively, utilities would need to recognize that the fossil energy path leads to a dead-end and that renewables ought to be the default resource option going forward. From that starting point, designing a program in which modest customer premiums actually result in additional supplies of renewable energy should be a simple and straightforward exercise.
It’s the very least a responsible utility should do to reduce the impact of generating electricity on the one planet we are privileged to call home.
Michael Vickerman is program and policy director of RENEW Wisconsin, a sustainable energy advocacy organization. RENEW Wisconsin is a member of RE-AMP, which also publishes Midwest Energy News.
Find the original article post here.
Immediate release:
December 5, 2012
More information:
Michael Vickerman
608.255.4044, ext. 2
mvickerman@renewwisconsin.org
Neither encouraged nor discouraged by state legislative election results, RENEW Wisconsin will hold its second annual energy policy summit to shape policy initiatives that will accommodate customer-driven renewable installations in 2013 and beyond.
Set for Friday, January 11, 2013 in Madison, RENEW Wisconsin’s summit, called Powering Positive Action, aims to synthesize the ideas and aspirations of business leaders, elected officials, and clean energy advocates into an achievable policy agenda.
“This year a bipartisan legislative panel will outline their energy policy goals and identify specific initiatives that can move forward in the upcoming session,” said Michael Vickerman, RENEW Wisconsin’s Director of Policy and Programs.
Senator Dale Schultz (R-Richland Center), Representatives Chris Taylor (D-Madison) and Gary Tauchen (R-Bonduel), and Chris Schoenherr, Deputy Secretary of the Department of Administration, have agreed to take part in the legislative panel.
Other plenary sessions will focus on policies and practices that advance jobs and economic development through in-state development of renewable energy. One promising initiative vigorously promoted by RENEW, called Clean Energy Choice, would allow business and residential customers to directly access clean energy produced on their premises from third party-owned systems. “We would like policymakers to hear company representatives discuss the fit between on-site renewables and their ability to remain competitive in a period of great energy uncertainty,” Vickerman said.
Over the lunch hour, RENEW will recognize a host of pioneering businesses that are advancing renewable energy use in Wisconsin.
“This year businesses and nonprofits took the reins of the renewable energy marketplace, and we wish to honor their outstanding achievements,” Vickerman said.
Former Colorado governor Bill Ritter, will deliver the keynote address. During his two terms, Ritter championed several innovative policies that are now fueling one of the healthiest energy economies in the nation.
Registration details and other information about RENEW’s 2013 Energy Policy Summit are posted at www.renewwisconsin.org.
RENEW Wisconsin is an independent, nonprofit 501(c)(3) organization that acts as a catalyst to advance a sustainable energy future through public policy and private sector initiatives. More information on RENEW’s Web site at www.renewwisconsin.org.
An article from Public News Service, by Deborah Courson Smith and Chris Thomas. See the original here.
MADISON, Wis. – “Two cents” may not sound like much, but it’s at the heart of the debate over the Wind Production Tax Credit (PTC), which will expire in a few weeks if Congress doesn’t renew it. Wind-power producers receive about two cents back for every kilowatt-hour of power they generate, and renewing it could help rebuild Wisconsin’s manufacturing sector, according to Tom Eggert, co-director of the Wisconsin Sustainable Business Council.
Tom Eggert, co-director of the Wisconsin Sustainable Business Council. |
“We’ve lost 170,000 manufacturing jobs since 2000. We need to get some of those back. Some of those jobs need to be in the wind supply chain.”
Eggert’s organization recently released a report on the potential for technology jobs in the state, and found the connection to clean energy industries was strong, with a work force ready to go.
Michael Breen is a former Army officer who now heads the Truman National Security Project. He’s making the case that many of those jobs are a perfect fit for veterans because of skills learned in the military, along with willingness to accept a challenge.
“And the clean energy sector is like that: it’s a dynamic, emerging place; new solutions are being put forward that are going to make all of our lives better and make us stronger as a country. Veterans are naturally attracted to that sort of thing.”
Tom Eggert says there are at least 300 companies in Wisconsin connected to the wind-energy industry, and thousands of jobs.
“So, these are all companies that supply parts or services to the wind industry. Without the Production Tax Credit, none of those companies are probably going to fail, but they’re not going to grow as quickly as they otherwise would be growing.”
The credit has seen bipartisan support in the past, with controversy this year centering on the cost.
Find this article in it’s original post here.
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Bill Ritter, Summit Keynote Speaker |
We are thrilled to host former Colorado Governor, Bill Ritter, as the keynote speaker for the summit. During his time as governor, his administration made Colorado one of the leading states in the US in renewable energy.