Maryland Governor Lawrence J. Hogan, Jr., vetoed an increase in the State’s Renewable Energy Portfolio Standard that would have resulted in higher electricity prices across the State. This push back against an ever increasing legislatively mandated subsidized renewable energy ‘market’ portends a national trend.
Specifically, Governor Hogan announced he was vetoing House Bill 1106 – Clean Energy Jobs – Renewable Energy Portfolio Standard Revisions, as enacted in the just concluded 2016 Maryland General Assembly session.
The legislation has been characterized as a “tax increase” to be levied upon every electricity ratepayer in Maryland. House Bill 1106 would impose higher electric prices from $49 million next year to $196 million by 2020 to fund the proposed increase in the State’s Renewable Energy Portfolio Standard.
The aim of House Bill 1106, to increase the State’s Renewable Energy Portfolio Standard to 25% by 2020 is laudable, but the dramatic increase in dollar costs to Maryland ratepayers for electricity, not to mention the regressive nature of the additional dollars, including burdening the poor that rely on electricity to heat and light their homes, while benefitting out of state investors in the solar industry (many of which institutional investors leverage those dollars with federal tax incentives), was widely seen as the wrong approach.
Maryland ratepayers already were assessed over $104 million dollars for renewable energy credits in 2014 (the last year for which data is available), most of which went to subsidize solar installations. House Bill 1106 would have imposed an additional burden on ratepayers each year. Forecasting precise Renewable Energy Portfolio Standard prices is difficult, as the markets for them are influenced by multiple factors, including technology costs, labor costs, permitting costs, electricity costs, capacity market prices, potential future environmental regulations, and federal and state tax policies, but this bill would have nearly doubled year 2014 costs.
It is worthy of note that Maryland’s largest electricity generating utilities did not oppose this bill. Some have suggested that under the regulatory complexities of many jurisdiction’s Renewable Energy Portfolio Standards, it is the dinosaur electric generating monopolies that are actually among the largest dollar beneficiaries.
Without this now vetoed bill, under existing law, Maryland will retain its status as a national leader in renewable energy. In 2016, electric suppliers must demonstrate they have accumulated RECs at a percentage of 15.9 of their total electric supply into Maryland. This includes 12.7% for Tier I renewables, 0.7% for Tier I solar, and 2.5% for Tier 2 hydroelectric. The current law will have Maryland reach 20% by 2020 with the inclusion of express standards for solar and offshore wind (.. yes, Maryland rate payers are subsidizing offshore wind development and later operation) by 2022.
But calculatedly, the Maryland Portfolio Standard does not take into account that more than one third of electricity in the State is generated from nuclear power, the ultimate (but controversial) renewable energy source that produces virtually no greenhouse gas emissions.
Maryland first adopted a Renewable Energy Portfolio Standard in 2004 and has subsequently increased it. Maryland’s existing law has benefitted the growing solar industry, but there is also a corresponding cost which is borne by all Maryland citizens.
And that cost does not exist in a vacuum where Maryland ratepayers are already burdened with $277 million in Regional Greenhouse Gas Initiative ‘cap and trade’ program costs on emission allowances (through 2013, the last year for which data is available), despite a recent Congressional Research Service report that concluded, “from a practical standpoint, the RGGI program’s contribution to directly reducing the global accumulation of GHG emissions in the atmosphere is arguably negligible.”
And significantly, Maryland advantage the solar industry in other ways including that all solar panels in Maryland are, by law pervious (don’t be confused by the interplay of law and science) for purposes of stormwater management, zoning and the like.
Twenty years ago Maryland had among the least expensive price of electricity to the ultimate consumer in the residential, commercial and industrial sectors, but as of March 2016 at 14.3 cents per Kilowatt hour the average price is among the highest in the continental U.S. and the very highest among all south Atlantic states.
That rate does not include that at the time of the veto, pending before the Maryland Public Service Commission was a Baltimore Gas and Electric Co. electric and gas rate increase, largely to recoup cost of smart meters, that was ultimately approved on June 3, 2016 which is expected to boost the average residential customer’s monthly bill by $7.53.
The veto was Maryland’s effort to strike a balance in energy policy. Governor Hogan is to be applauded for vetoing House Bill 1106 as part of a national rebalancing of government energy subsidies (and not on the backs of the poor).