Energy Blog

Energy Blog

US Chamber of Commerce Blog

Sean Hackbarth Electricity meter Photo credit: Michael Nagle/Bloomberg.

Much has been written here and elsewhere about EPA going way beyond its authority to tell states how to generate electricity. The agency’s Clean Power Plan—using the hollow word “flexibility”—limits the states’ options to reduce carbon emissions by stacking the deck against coal and natural gas and in favor of wind and solar.

Sens. Angus King (I-Maine) and Harry Reid (D-Nev.) want to play the same game by restricting states’ ability to change electric metering policies for rooftop solar power generation.

Distributed solar power could be the wave of the future, just as the Internet distributed computing power. As Noah Buhayar at BloombergBusinessweek writes, just like the price of computing has collapsed, innovations have cratered the price of solar power:

Adjusting for inflation, it cost $96 per watt for a solar module in the mid-1970s. Process improvements and a huge boost in production have brought that figure down 99 percent, to 68¢ per watt today, according to data from Bloomberg New Energy Finance.

A new industry of solar panel designers and installers has sprung up like daisies in the spring to meet this demand.

Some people install panels to shave a few dollars off their electricity bills; for some, rooftop solar is a status symbol that matches the hybrid car sitting in their garage, and for others it’s a step toward going “off the grid.”

Whatever the reasons, lower prices, taxpayer subsidies, and a state electricity policy called “net metering”--which allows consumers with solar panels to sell excess electricity back to utilities—has spurred demand for rooftop solar panels.

Forty-four states have some form of net metering, according to BloombergBusinessweek, but as executive director of the Harvard Electricity Policy Group and a former Ohio public utility commissioner Ashley Brown explains, the policy creates cross-subsidy problems:

Because utilities must pay a retail price for a wholesale product, net metering enables those with rooftop solar systems to avoid contributing to the costs of maintaining the electric grid and keeping it operating reliably.

Brown continues:

What results is an inequitable shift in grid costs to non-solar customers, who are, on an aggregated basis, less affluent than those they are being asked to subsidize. Recently, the Nevada Public Utilities Commission found that, "the annual subsidy associated with the existing shift in fixed costs from net metering customers to other customers is approximately $623 for each residential net metering customer in southern Nevada and $471 for each residential net metering customer in northern Nevada."

Under net metering, when the sun isn’t shining, rooftop solar owners enjoy the use of transmission lines, transformers, and other components of the modern power grid without paying their fair share for these facilities.

A non-solar neighbor should not have to pay the full freight for his neighbor’s electricity grid access solely because the neighbor has the wherewithal to install solar panels on their roof. 

Federalism is a good solution. States are in the best position to find the right balance between electricity producers and consumers. However, an amendment by Sens. King and Reid in Sen. Lisa Murkowski’s (R-Alaska) energy bill would remove state flexibility by locking in place inequitable net metering policies, as Justin Sykes at Americans for Tax Reform writes:

The King-Reid amendment would establish stringent federal standards dictating how each state may operate their net metering programs. Net metering policies vary by state, but in general electric utilities are required to purchase excess electricity generated by customers with rooftop solar installations at the full retail rate as opposed to wholesale. As result, solar customers avoid paying for many of the fixed costs of the grid, and thus these fixed costs are shifted onto non-solar customers. 

The new federal standards imposed by the King-Reid amendment, such as requiring extensive evidentiary hearings, would thus act as a new legislative barrier to states seeking to address the cost-shifting dilemma.

This amendment would effectively take such decision making ability away from the states and give it to the federal government. Furthermore, the King-Reid amendment would only work to further the practice of forcing non-solar customers to subsidize net-metered customers.

States, rural electric cooperatives, and certain localities are undoubtedly in a much better position than the federal government to make decisions about state energy policy. The states are already reeling from a slew of regulations put forth by President Obama, such as the Clean Power Plan, that empower federal regulators at the expense of state sovereignty.

The National Association of Regulatory Utility Commissioners also opposes the King-Reid amendment stating:

The amendment is well intentioned, and NARUC's members are strong believers that regulatory determinations on rates should be based on an impartial judgment on the most complete evidentiary record possible, but which are nimble enough to meet a sector that is changing rapidly.

The practical implications of the amendment to State utility commissions would weigh down commissions and prevent them from this nimbleness.

Fair metering policies aren’t anti-solar. No one wants to stop anyone from installing solar panels on their rooftops. Solar power has a role in electricity generation just as much as does coal, natural gas, wind, nuclear, and hydropower. However, it needs to compete fairly in the marketplace. Free-riding on the power infrastructure is not acceptable.

Just as EPA shouldn’t mandate to states how electricity should be produced, Congress shouldn’t take away state regulatory authority by tipping the scales in favor of one form of energy over another.

Sean Hackbarth Fossil fuel protesters in London, U.K. Fossil fuel protesters in London, U.K. Photo credit: Garry Knight. Licensed under a Creative Commons license.

Because he’s not running for reelection, President Barack Obama felt free to express his real views on energy at this year’s State of the Union address by declaring, “Now we’ve got to accelerate the transition away from old, dirtier energy sources.”

As recently as 2014’s State of the Union address, President Barack Obama touted an “All-of-the-above energy strategy.” Today, the president sounds more like environmental zealots intent on eliminating fossil fuel use.

Activists like Bill McKibben and Greenpeace tout a “Keep it in the ground” strategy. They want to stop using coal, oil, and natural gas—which comprise more than 80% of total U.S. energy demand—now, no matter the cost.

Obama administration policies echo these extreme views. 

In an interview with Oil & Gas 360, Christopher Guith, senior vice president for policy at the Institute for 21st Century Energy, explained EPA’s plant to eliminate fossil fuel use in the U.S.:

“Once the EPA identifies a pollutant as hazardous, by law they have to regulate it,” Guith told Oil & Gas 360®. The EPA identified carbon dioxide as hazardous under the Clean Air Act, and they put in regulations to cut it back.

Guith said the EPA created the standard and then they give the states the mandate to meet their standard. By law, it’s up to the states to achieve the EPA targets.

“The plan was to go straight to renewables,” Guith said, but current technology got the way:

But Guith said that when they realized that won’t work because there is no current grid-scale method to efficiently store the electrons generated by intermittent sources (solar and wind), the thinking was that if we penalize coal and natural gas enough [to force utilities away from using them as fuels] then the development of a storage technology will happen—something that will make renewables work.

It’s the “South Park Underpants Gnomes Profit Plan.”

The uncertainty created by the Clean Power Plan combined with regulations on mercury emissions from power plants (that didn’t pass muster by the Supreme Court) are doing what EPA intended: Reducing coal consumption. According to Energy Information Agency data, the share of electricity generated by coal is at its lowest level since at least 1970.

These regulatory attacks won’t end with coal. Guith explains that natural gas is next in EPA's sights [emphasis mine]:

Guith says that for utilities who build brand new combined cycle natural gas-fired power plants today, these plants are highly efficient, represent state of the art technology and they are rated as the maximum CO2 output for a modern natgas plant when they are built. It represents 2016’s standard for CO2 emissions from a combined cycle natural gas power plant.  But once the EPA triggers the process, they will reset the standard at a mandated 5 or 10-year review. So the maximum will be reset in 2021 or 2025. “And it has to be lower than a 2016 plant, so today’s plants can’t be built new to the same standards in 2021.”

Guith said the goal of the EPA is to get rid of the pollutant, and CO2 is just starting off, so the standards will keep getting more stringent until eventually it will be impossible to have a natural gas power plant that meets the standards. And, by law, the EPA can force whomever is president to comply. The process is self-fulfilling because every five year period the natural gas plant CO2 standard will be ratcheted tighter until, like coal, the standard will be impossible to attain.

Following natural gas, petroleum products such as gasoline are also targeted to elimination by this radical agenda. If the attacks succeed, fossil fuel use will be as extinct as the dinosaurs, and our economy and standard of living will suffer greatly for it.

“All-of-the-above” is no longer in the president’s vocabulary. “Nothing-from-below” is a more accurate description of President Obama’s energy intentions.

Thomas J. Donohue

One can hardly claim to support an all-of-the-above energy strategy while continually working to keep coal, one of our most abundant and reliable resources, locked underground. But that’s exactly what the administration aims to do. Intensifying efforts to put coal out of business would exact a heavy toll on our country, resulting in higher energy costs for consumers, a less reliable electricity grid, lost energy jobs, lower revenues for local and state government coffers, and slower economic growth.  

The latest assault on coal came last month when the Department of Interior announced a moratorium on future coal leases on federal land—where 40% of all U.S. coal is currently mined. This is on top of a raft of rules and regulations that have targeted the industry over the past several years.

Regulations covering surface mining, coal ash, cross-state emissions, regional haze, and ozone, among other things, are squeezing the industry within an inch of its life. And looming largest are the president’s climate change regulations, which impose unachievable mandates on existing coal-fired power plants and effectively ban the construction of new ones. It’s little wonder that coal production has been driven to a 30-year low.

Yet coal must remain a vital part of our diverse energy mix. Today, coal generates nearly 40% of our country’s power. States that rely on coal have lower electricity rates and are more attractive locations for manufacturing and other energy-dependent industries. Nearly 1 million Americans directly or indirectly owe their jobs to coal.

There is no question that we should strive to advance clean coal technologies, as we have done successfully for decades. But the president’s climate change agenda—a centerpiece of his legacy—hinges on coal’s demise. This is a flawed approach to achieving carbon reduction goals that will only hurt our workers, our economy, and our competitiveness. Meanwhile, much of the rest of the world is increasing its dependence on coal—more than 2,000 coal plants are planned or under construction across the globe. As a result, the president’s sweeping rules may not reduce greenhouse gas emissions at all, instead simply moving them to other countries that have not implemented similar restrictions.

The United States has proven that technology, efficiency, alternative sources, and cleaner use of traditional resources, including coal, together can help address climate change in a meaningful way. With this approach, we can maintain a diverse energy mix that meets consumers’ needs and supports a growing economy while taking reasonable actions on environmental challenges.