Kansas residents and businesses are paying higher electricity prices as a result of the state’s renewable power mandate, the Beacon Hill Institute and the Kansas Public Policy Institute report in a newly released study.
Rapidly Rising Mandates
In 2009 then-Gov. Mark Parkinson (D) signed the renewable power mandate into law. The law mandates that between 2011 and 2015 renewable sources must power at least 10 percent of electricity generation in the state. The mandate increases to 15 percent after 2016 and 20 percent after 2020.
Current Gov. Sam Brownback (R) is an enthusiastic supporter of the renewable power mandate. Together with U.S. Sen. Jerry Moran (R), Brownback is backing an extension of the federal Production Tax Credit (PTC) that delivers U.S. taxpayer subsidies to the wind power industry.
Prices Rise, Jobs Destroyed
The Beacon Hill Institute applied its State Tax Analysis Modeling Program to estimate the economic effects of the Kansas mandate. According to the analysis:
• The renewable power mandate will raise consumer electricity costs by $644 million through 2020, within a range of $192 million and $1.042 billion.• The mandate will raise Kansas electricity prices 45 percent by 2020.
• By 2020 the higher energy costs will kill 12,110 jobs, within a range of 3,615 jobs and 19,609 jobs destroyed.
•By 2020 the higher energy costs will reduce real disposable income by $1.483 billion, within a range of $443 million and $2.402 billion.
•By 2020 the mandate will increase the average household electricity bill by $660 per year; the average commercial business’s electricity bill by $3,915 per year; and the average industrial business’s electricity bill by an average of $25,516 per year.
Chasing Jobs Away
With an unemployment rate of 6.2 percent, Kansas has been spared the worst of the nation’s prolonged economic slump. But the Kansas Policy Institute warns that any policies making the state less competitive with its neighbors will take a significant economic toll on Kansans.
"Renewable energy is more expensive than conventional energy," the Kansas Policy Institute explained in a press release accompanying the study.
“As the country continues to struggle economically, Kansas needs to offer more to attract entrepreneurs and jobs, such as reducing taxes and regulatory burdens,” Kansas Policy Institute President Dave Trabert said. “The renewable power mandate does the exact opposite—it chases people away who might be looking to invest and could cause some manufacturers to leave.
“Renewable energy mandates may be well-intended, but they have negative consequences for taxpayers, with the exception of those few winners who benefit from taxpayer subsidies,” Trabert explained. “Kansas’s policies should not be about picking winners and losers.”
Bonner R. Cohen, Ph. D., (firstname.lastname@example.org ) is a senior fellow at the National Center for Public Policy Research.
“The Economic Impact of the Kansas Renewable Portfolio Standard,” July 1, 2012: http://heartland.org/policy-documents/economic-impact-kansas-renewable-portfolio-standard