10/28/2008 11:21:00 AM Prop C not immune to criticism Group pushing renewable energy mandate in Missouri addresses cost concerns, focus on privately owned utilities
Projected Direct Economic Impact of Proposition C through 2021
9,951 new jobs created
$856.6M in new worker income
$2.87B in value of new goods and services produced
A recent study funded by The Energy Foundation, a pro-renewable energy partnership based in San Francisco, and authored by David Laslo, a professor at the Public Policy Research Center at the University of Missouri-St. Louis, attempted to gauge the economic impact of Proposition C in Missouri. The study's projections are based on a renewable energy mix of 90 percent wind, 8 percent biomass and 2 percent solar, with half of the wind energy produced in state.
While there may not be any organized opposition to Proposition C, the ballot initiative hasn't completely escaped criticism.
Dubbed the Missouri Clean Energy Initiative by its backers, Prop C would require Missouri's three investor-owned utility companies - AmerenUE, Empire District Electric and Kansas City Power & Light - to annually increase their usage of renewable energy to 15 percent by 2021. Incremental renewable energy benchmarks laid out in the initiative include 2 percent usage by 2011, then 5 percent by 2014 and 10 percent by 2018.
Two of the three utilities - Ameren and Empire - have taken a neutral position on the initiative, while KCP&L has endorsed the measure.
Empire spokeswoman Julie Maus said the Joplin-based utility believes there are "flaws in the proposition," not the least of which is its omission of publicly owned utilities and rural electric cooperatives.
"If it is a good standard for investor-owned utilities, it should be a good standard for all utilities," she said.
Missourians for Cleaner Cheaper Energy - the group that circulated the petition to place Prop C on the Nov. 4 ballot - focused on investor-owned utilities because they generate 76 percent of the state's electricity, said spokeswoman Erin Noble. She added that attempts to legislate renewable energy requirements in Missouri for the past eight years have been unsuccessful.
"I'm not sure that we can rely on these utilities to be as forward-thinking in that it seems like they've been cruising along with business as usual," Noble said. "... The renewable electricity standard is the most successful policy to stimulate new renewable energy capacity."
Under Prop C, the three utilities also would have to achieve mandated goals without passing related costs to customers in the form of steep rate increases. Annual rate increases tied to renewable energy would not be allowed to exceed 1 percent, according to the ballot language.
Of the 26 states with so-called renewable electricity standards in place, a 1 percent cap on annual rate increases is comparatively stringent, Noble said, noting that Prop C proponents modeled the measure after one approved by Colorado voters in 2004. That standard initially applied to investor-owned utilities and was expanded by Colorado lawmakers last year to include rural co-ops and municipal utilities.
City Utilities of Springfield is a publicly owned utility that wouldn't initially be affected by Prop C, but renewable-energy advocates may be gunning for CU and Missouri's rural co-ops if voters approve the initiative.
"As for Proposition C ... we have no idea what the future holds," said CU spokesman Joel Alexander. "I think any utility is going to need to be aware and look at its options for providing renewable energy in its generation portfolio. ... But the main thing is it needs to be reliable and cost-effective to our customers."
With the recent signing of a 20-year contract for wind energy from Kansas, CU will generate about 11 percent of its electric power through renewable sources, Alexander said. The contract is with Trade Winds Energy Group, a Lenexa, Kan.-based wind farm that's backing Prop C. According to the Missouri Ethics Commission, the company has funneled $125,000 to Missourians for Cleaner Cheaper Energy (www.missouricleanenergy.org). Though Trade Winds' donation is the largest to the group, St. Louis-based Wind Capital Group also kicked in $100,000 to Missourians for Cleaner Cheaper Energy, as did the Washington, D.C.-based American Wind Energy Association.
Noble said the cost of renewable energy is expected to decrease over time as it has in other states with similar standards. She also suggested that, by requiring Missouri's investor-owned utilities to produce or buy more renewable energy, the state will become more attractive to wind farm developers and other renewable energy companies.
Initiative supporters expect about 90 percent of Missouri's renewable energy to come from wind, with roughly half of that power produced in state. Like Colorado's standard, Missouri's would count each kilowatt-hour of renewable energy produced in state as 1.25 kilowatt-hours for compliance purposes, Noble said.
Utility companies unable to meet the requirements laid out in Prop C will face fines, although Noble said the Missouri Public Service Commission would set specific policies for administering the standard and related penalties.
Maus at Empire said the utility shouldn't have any difficulty reaching the initial requirements if the initiative passes. The utility has contracts with two wind energy farms in Kansas that together will account for about 15 percent of Empire's electric power, she said.
"We do sell the green credits ... to further offset costs for our customers," Maus added. "However, at the time that we would need to begin using those credits, we would start retaining them for our own use."
At least one commentator has questioned whether Prop C will play out as its backers have envisioned. Show-Me Institute intern Jacob Voss said the "feel-good" initiative may have hidden costs - a theory he explores in an article available at www.showmeinstitute.org. Show-Me Institute is a nonprofit research group that promotes free markets and individual liberty.
"There's no way to predict how much getting to 15 percent is going to cost," Voss said, noting that utilities constrained by rate increase caps might have to make up losses by cutting their budgets or reducing shareholder returns.
Voss, an economics undergraduate student at St. Louis University, argued that mandates are rarely an effective policy tool, and he suggested that Prop C does little more than establish a lowest common denominator that would allow the utilities to brag about their renewable energy usage.
"All this is doing is giving them a public image to hide behind," he said.
But Noble said a better example of "greenwashing" is the voluntary renewable electricity standard, or RES, that Missouri lawmakers passed last year. Still, less than 1 percent of Missouri's energy comes from renewable sources, while about 82 percent is derived by burning coal, she said.
Reader Comments
Posted: Monday, August 02, 2010
Article comment by:
Michael Goben
The govern. cant even run itself let alone private buss. I think we have enough ordinances, Laws , Rules, and Regulations. Time to stop before we outlaw ourselves. In fact we need to get rid of some. Let the customers decide how the company should run by its customer base, If you don't like it don't shop there. The only law we should pass is every law, ordinance, every rule should be looked at and changed or repealed every 10 years. Then we wont have time to think up more stupid laws.
