With Price of Natural Gas Plummeting, Mandates Will Only Result in More Second Guessing

This is a great little opinion piece in this weekend's edition of the Wall Street Journal:

Politicians keep promising to reduce energy prices, but they keep ignoring one easy step: repeal renewal energy standards. Twenty-nine states have these rules requiring local utilities to purchase between 20% and 33% of their electric power from renewable sources. They were enacted over the past decade when lawmakers bought into the fad about cheap "clean energy." Their real effect has been to force utilities to pay above-market prices for electricity, which means higher electric bills for consumers.

No state has learned that lesson the hard way more than Minnesota. In 2007 the legislature mandated that utilities ramp up their renewables to 12% this year and 25% by 2025.

The Minnesota Rural Electric Association, which represents about 50 small utilities serving about 650,000 rural residents, reports that its members lost more than $70 million in 2011 because of the high cost of wind power. "Right now we're paying for wind power we don't need, we can't use and can't sell," says association executive director Mark Glaess. 

And then the zinger. The writer compares Minnesota's experience with that of North Dakota's:

And what are consumers getting in return? The environmental benefit is almost zero since no state can do much to alter the global volume of carbon emissions. The renewable mandate was also sold as a way to gain "green jobs" and, as the Environmental Protection Agency puts it, "stimulate market and technology development" in states. But the mandate fails that test too, because Minnesota imports much of its wind power from North Dakota.

A 2012 study by the Manhattan Institute compares states with renewable mandates to those that allow utilities to purchase the cheapest electricity available. The states with mandates paid 31.9% more for electricity than states without them. According to the U.S. Energy Information Administration, residents of North Dakota, a state without a mandate, pay 7.63 cents per kilowatt hour for electricity. Neighboring Minnesota pays 10.76 cents.

With natural gas down to unheard-of prices, and completely unexpected levels, wind energy mandates will only look more ridiculous. 

Not mentioned in that short little piece is that the high cost of energy in Minnesota will drive manufacturers out of Minnesota and into North Dakota, which I've blogged about many, many months ago.