My respect for University of Cincinnati Professor Joe Tomain is deep, but I need no energy policy lessons from him.
I agree that there are no truly free markets, but Ohio’s electric generation market is now unregulated. Natural gas, with which Ohio is bountifully blessed, sets the price as the preferred electricity fuel to the exclusion of coal, nuclear, wind and solar. Ohio electric utilities no longer enjoy any guaranteed government-supported monopoly on the generation side of their business. However, state law mandates that electric utilities must purchase ever-increasing quantities of specified “clean energy” fuels distort the free competition. Thanks to 2014 legislation, we know that since 2008, consumers’ electric generation bills increased by 9 percent due to the renewable and energy efficiency mandates that remain enshrined in Ohio law.
I also agree that both fossil fuels and renewable resources have received government subsidies. However, nothing in the bill that Gov. John Kasich vetoed reduced or eliminated any such subsidies. In fact, part of the bill greatly increased the dollars spent by Ohio on making low-income housing more energy efficient. Rather, the bill sought to relax the mandates that the electric companies achieve specified targets or face heavy fines. To say that fossil fuels have been subsidized is to forget that government never mandated that consumers had to buy coal, oil or gas. Why, then, do renewable energy advocates seek mandates that utilities buy their product and pass the higher cost on to unsuspecting ratepayers?
Tomain is simply inaccurate in claiming that over 40 states have these mandates. In fact, only 29 do, according to a 2016 report by the National Conference of State Legislators. Significantly, three of Ohio’s neighbors do not have these mandates – Kentucky, Indiana and West Virginia. In all three states electric rates are lower than in Ohio. The bill that Kasich vetoed merely ended Ohio’s mandates for two years, during which time the mandates would become goals; it certainly did not “strip Ohio of clean energy standards” even though these mandates reek more of socialist central government planning than anything approaching a free competitive market.
The good professor is also incorrect when he claims that fossil fuel subsidies “dwarf those available to solar, wind and energy efficiency.” In its 2015 report to Congress, the U.S. Energy Information Administration stated “Renewables (excluding biofuels) received 72 percent of all electricity-related subsidies and support in FY13, yet accounted for 13 percent of total generation.” Billionaire investor Warren Buffett explained that subsidies alone accounted for his investment in wind farms: “They don’t make sense without the tax credit.”
The lavish nature of the federal renewable energy tax subsidies renders it overkill to insist on state clean energy mandates, too. When I had 29 solar panels installed at my home, Uncle Sam extended a 30 percent tax credit on the total cost. I get to sell excess power on sunny days back to Duke for more than Duke charges me to buy power on sunless ones. Given such governmental largesse, why cripple all ratepayers with higher-cost electricity through government mandates to assuage the environmental preferences of the clean energy crowd?
Finally, despite those who disparage the president-elect and his Cabinet, the Trump energy policy is based on:
- Eliminating barriers to energy independence through means such as approving the Keystone and Dakota pipelines and authorizing additional exploration.
- Revising or repealing U.S. EPA regulations such as the misnamed Clean Power Plan that would have increased Ohio electric rates by 39 percent by 2025, according to the Ohio EPA director’s congressional testimony
Such a strategy involves neither mandates nor subsidies, while simultaneously allowing “clean energy competitors” to compete on their merits (price, reliability, environmental attributes) if they can. That sounds much more like a free market capitalist plan than does the top down web of government mandates and subsidies that today prop up the renewable energy business, a web from which “Trump’s troika” may rescue us even though Kasich and the Democrats remain happily enmeshed in it.