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PennFuture rebuts Beacon Hill renewable study

By - Last modified: March 19, 2013 at 9:26 AM

A free market think tank's criticism of Pennsylvania's alternative energy portfolio standards is based on bogus analysis, Harrisburg-based environmental group PennFuture said last week.

Beacon Hill Institute's December 2012 study of the standards, which mandate that utilities acquire certain minimum percentages of their energy from renewable sources, "fails to understand the AEPS law, handpicks data sources, inconsistently applies that data, and uses a proprietary 'black box' economic model to induce its conclusions," PennFuture said.

"They fail to take into account consumer protections in the law and reference cost impacts that are 225 percent to 427 percent greater than the AEPS would even allow," Christina Simeone, director of the PennFuture Energy Center, said in a statement.

Beacon Hill's study suggested that Pennsylvania's portfolio standards would lead to utility bill increases of 12 percent to 15 percent and cost consumers an additional $16.3 billion from 2013 to 2021.

But data compiled by the state Public Utility Commission on the program so far indicates the impact on the average residential consumer has been about 6.6 cents a month, PennFuture said.

In a worst-case scenario, if utilities spent the maximum allowed by law to meet their portfolio standards, rates would rise 3.5 percent, PennFuture said.

Moreover, the Beacon Hill study projects that adding renewable energy to Pennsylvania's portfolios will raise prices. In fact, renewable energy projects have driven modest declines in prices, PennFuture said.

"[W]ind and solar bid into the wholesale electricity market at a price close to zero," in large part because they have no fuel costs, PennFuture said.

The environmental group cited a study by PJM, the regional grid operator that manages the Mid-Atlantic's wholesale electricity market. PJM found that adding 15,000 megawatts of wind energy would reduce wholesale electricity prices by $5 to $5.50 per megawatt-hour.

Alternative energy mandates in Pennsylvania and other states are proving contentious. Conservative groups have mounted a nationwide campaign against them, warning they will drive costs up, but advocates say they are helping to wean the U.S. from a dangerous reliance on fossil fuels.

Beacon Hill is "the research arm" of the economics department at Suffolk University in Boston. Its full study is available here; PennFuture's full response is available here.

Write to the Editorial Department at editorial@cpbj.com

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