We are pleased to bring you this commentary by Mark Glaess, Manager for the Minnesota Rural Electric Association . Mr. Glaess cites the study we commissioned from the Beacon Hill Institute released last week.

“The Economic Consequences of Good Intentions”

Not long ago, San Francisco officials forced “low-flow” toilets on the populace to save water. However, these water-saving devices are not producing sufficient surge with each flush to keep the solid waste pipes under the streets of San Francisco from becoming constipated. To address this problem, the city just ordered $13 million worth of Clorox to pour down the drains to kill the smell. This is what’s known as the “law of unintended consequences” or better yet, “Murphy’s Law,” which says: “Anything that can go wrong will go wrong.”

There is yet another related law called “The Law of Good Intentions.” This is how that works:

In 2007 Governor Pawlenty promoted renewable energy and conservation mandates; all great laws of very good intentions. Four years later every Minnesotan has higher energy rates as a result. We now know that the wind mandate has cost this state close to $100 million because that breeze occurs when it is least needed. Those costs will only get worse as the renewable mandate increases until we hit 25 percent by 2025. The mandate to reduce energy consumption by 1.5 annually cost 20 cents to save 11 cents. Mandating conservation when utilities are generating more electricity than the market needs makes that conservation less and less cost-effective.

Wind and solar require significant fossil fuel-based backup power sources to accommodate variability in the availability of wind and sun for power conversion. A recent study by the Beacon Hill Institute in Boston and Robert Bryce (author of “Power Hungry”) found that wind power actually increases pollution and greenhouse gas emissions due to these required backup systems. Firms with high electricity usage could move their production, and emissions, out of Minnesota to locations with lower electricity prices and less uneconomic regulatory regimes. Exporting energy production and jobs will not reduce global emissions, but rather send production, jobs and capital investment outside the state, or even outside the country where net global emissions would almost surely be increased

It is, or should be, a given that electric cooperatives are the nation’s leaders in energy conservation and reducing pollutants. Since 1991, co-ops have offered their members the option for the co-op to “control” their air conditioners, water heaters and other large electric appliances. For that you see portions of your electric bill reduced by 40-50 percent. By controlling electric loads, the co-ops collectively have shelved the need to build a 500 MW power plant. That has saved the state’s cooperative customers over $1 billion.

Not everyone has been disadvantaged however. The San Francisco-based Energy Foundation has provided millions of dollars to Minnesota’s environmental groups like the Izaak Walton League, Fresh Energy and the Blue-Green Alliance to oppose clean coal-powered generation in favor of increasingly expensive energy efficiency and cost-prohibitive renewable energy laws. So you could say that while the average Minnesotan has seen their electric rate increase because of these laws of good intentions, the environmental community that employs some 70 lobbyists in St. Paul have made out quite well.

Tags: Climate Change, Commentaries, energy, Regulatory Reform, Renewables

This entry was posted on Saturday, April 30th, 2011 at 10:49 am and is filed under Blog Posts, Climate Change, Commentaries, Energy, Environment, Property Rights, Renewable Portfolio Standards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.