Cheap natural gas prompts states to sour on renewables

2013-05-05T00:00:00Z Cheap natural gas prompts states to sour on renewablesChristopher Martin Bloomberg News Arizona Daily Star
May 05, 2013 12:00 am  • 

More than half the states with laws requiring utilities to buy renewable energy - including Arizona - are considering ways to pare back those mandates after a plunge in natural gas prices brought on by technology that boosted supply.

Sixteen of the 29 states with renewable portfolio standards are considering legislation that would reduce the need for wind and solar power, according to researchers backed by the U.S. Energy Department. North Carolina lawmakers may be among the first to move, followed by Colorado and Connecticut.

The efforts could benefit U.S. utilities such as Duke Energy and PG&E as well as Exxon Mobil, the biggest U.S. oil producer, and Peabody Energy Corp., the largest U.S. coal mining company. Those companies contributed to at least one of the lobby groups pushing the change, according to the Center for Media and Democracy, a Madison, Wis.-based nonprofit group. It would hurt wind turbine maker Vestas Wind Systems and First Solar Inc., which develops solar farms.

"We're opposed to these mandates, and 2013 will be the most active year ever in terms of efforts to repeal them," said Todd Wynn, task force director for energy of the American Legislative Exchange Council, or ALEC, a lobby group pushing for the change. "Natural gas is a clean fuel, and regulators and policymakers are seeing how it's much more affordable than renewable energy."

Hydraulic-fracturing technology opened aging reservoirs for natural gas drilling, driving prices down about 72 percent from their record 2005 high. That's making more expensive wind and solar power projects harder for utility regulators to justify, according to ALEC and its allies, which include the Heritage Foundation in Washington.

"The shale revolutions are not just having ramifications politically and economically in the U.S. but also around the world," said Michael Liebreich, chief executive officer of Bloomberg New Energy Finance. "In 17 years, not that far away, we could reach peak energy use. This is not generally accepted."

Killing support for renewable-energy policies threatens sales at companies from wind-turbine makers General Electric and Siemens to SolarCity Corp., the San Mateo, Calif.-based rooftop energy developer.

The push at the state level replicates efforts in Washington. Opposition from Republican lawmakers delayed the extension of a federal tax credit for wind power, prompting Vestas, the biggest turbine maker after GE, to fire 10 percent of its workforce at two Colorado factories.

"There haven't been any outright repeals yet, but we've seen some watering-down," said Justin Barnes, senior policy analyst at the North Carolina Solar Center. "Activity against renewable portfolio standards has been increasing in the past year. Their arguments are mostly on cost."

The Raleigh, N.C.-based research group is supported by the Energy Department and operates the DSIRE database of state incentives.

U.S. investment in renewable power and energy efficiency fell 54 percent last year to $4.5 billion as government support waned, according to data compiled by Bloomberg. The level may slip again this year if states dilute their requirements, which have pushed utilities to contract power from renewable providers and scale-back use of coal- and natural gas-fired generation.

ALEC wants to repeal state mandates, arguing that the free market is a better way to determine the most cost-effective source of power, Wynn said. It typically drafts model legislation for state lawmakers to use as a blueprint when drafting bills, including the Electricity Freedom Act, which was published in October.

ARIZONA ANGLE

Arizona utility regulators haven't cut the state's renewable-energy standard, which requires state-regulated utilities including Tucson Electric Power Co. to generate energy equal to 15 percent of their retail power sales from renewable sources like solar and wind by 2025.

But the Arizona Corporation Commission, which regulates utilities in the state, has pulled back on incentives for rooftop solar installations as TEP and Arizona Public Service Co. have reached incremental goals for such installations under the state's renewable-energy standard.

Proponents of renewable energy have lost key allies on the elected commission, when two pro-solar Democrat commissioners lost their re-election bids last fall. All five members are now Republicans.

Commissioner Gary Pierce has been an outspoken critic of incentives for solar energy, arguing that particularly rooftop installations are too costly for ratepayers who fund installation incentives through monthly bill surcharges capped at about $3 for residential customers.

During consideration of APS' renewable-energy plan in January, Pierce floated an amendment that would have excluded more large commercial customers from the calculation of retail power sales, effectively reducing the renewable-energy requirement. Pierce later withdrew the proposal, but other commissioners have said they shared Pierce's concern over the cost of renewable-energy incentives.

And at least three Corporation Commission members and former legislators have been active with the American Legislative Exchange Council, which opposes renewable-energy mandates.

Current Commission Chairman Bob Stump formerly was a member of ALEC's task force on health care public policy, according to his legislative biography.

Commissioner Brenda Burns served on ALEC's board for nine years, becoming ALEC's national Chairman in 1999, according to her commission biography. Commissioner Bob Burns is a former ALEC state chairman for Arizona.

David Wichner, Arizona Daily Star

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