Mar 25, 2013

Wisconsin State's renewables mandate will cost the Badger State $788 million in higher electricity costs.

JSonline: Fifteen years ago, legislators, convinced that Wisconsin needed to embrace renewable energy at any cost, adopted the state's first so-called Renewable Portfolio Standard.

Rewritten since then, the standard now requires that utilities generate 10% of electricity from sources such as wind and solar by the end of 2015.

Now that the state is within shooting distance of attaining that goal, there is movement in the Legislature to increase the requirement to 25% by 2025. The Badger state's future, proponents of such mandates believe, lies in seizing green opportunities that will create scads of jobs for its residents and add billions of dollars to its economy.

Unfortunately, what looks good on the surface - both in terms of economics and the environment - is often not the case when drilling down to the details.

A deeper analysis reveals that the standard is far from the job creator and economic engine proponents claim. In simple terms (and in the laws of basic economics), when you mandate the purchase of a more expensive product (such as wind or solar power) to replace a less costly one (such as coal- or natural gas-generated power), the additional expense is passed to the buyer. The higher costs filter throughout the economy and leave less buying power for consumers and businesses.

In the case of Wisconsin, a specific analysis, "The Economic Impact of Wisconsin's Renewable Portfolio Standard," has been done. According to the study by the Beacon Hill Institute, an economics think tank at Suffolk University in Boston, the standard will raise electricity costs by 2.4% in 2016 alone. Over the four-year period between 2013 and 2016, the standard will cost the Badger State $788 million in higher electricity costs.

Wisconsin citizens can expect to see those impacts filter into the goods and services they purchase once the standard is in full effect. Based on Beacon Hill's analysis, commercial businesses will pay $1,195 more in electricity costs over the same four-year period, and the typical industrial user will pay $91,620 more. Those additional costs to business and industry then will be recovered at the checkout line and when you pay your bills.

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