John Locke Foundation  

Energy and Electricity

Recommendation

Policymakers should protect electric utility consumers from extra taxes and charges.

Background

Public Benefits Fund

• The Public Staff is an independent government agency that is supposed to represent the interests of electricity consumers before the North Carolina Utilities Commission. Unfortunately, this agency is supporting higher consumer taxes.

• The Public Staff is recommending that electricity consumers pay, in addition to rates, an add-on fee that has nothing to do with the supply of electricity. The money raised by the fee would go into a "public benefits fund" that could be used for almost anything.

• There may be an attempt to have this fee passed by the Utilities Commission without ever going to the legislature for approval — a move that is likely illegal.

Renewable Portfolio Standard

• A renewable portfolio standard would require utilities to provide a certain percentage of electricity through renewable sources, such as wind and solar, even though it would mean higher costs for electricity.

How a Public Benefits Fund Would Hurt Consumers

A public benefits fund gets its money from an electricity sin tax. The extra fee that will be charged is similar to a sin tax for cigarettes. It is an extra charge unrelated to the good (electricity) that consumers are required to pay in order to receive the good. The money collected then goes to a fund to reduce the use of the good — to reduce the sin. In this case, the sin is electricity usage.

The electricity sin tax that would finance the "public benefits fund" could be at least $181 million annually. This $181 million number is from the "North Carolina State Energy Plan" and is based on national averages.

This fund likely would be run by an unelected and unaccountable third party. The last thing North Carolina needs, especially in an era of governmental ethics problems, is another open-ended slush fund controlled by an unaccountable third party.

Why Legislators Should Eliminate the Public Staff

If the state electric utility consumer advocate believes raising taxes is beneficial, then it obviously is not doing its job. The Public Staff exists, according to the law that created the agency, to represent the interests of consumers — not the interests of utilities, environmental groups, or even the public interest.

Why a Renewable Portfolio Standard is Bad for Consumers

There is a lack of support for renewable sources of energy. NC GreenPower is a program that allows North Carolinians to voluntarily contribute money to produce electricity through renewable sources. The Utilities Commission's recent report on a renewable portfolio standard states "the NCGP [NC GreenPower] program thus far has been able to provide 0.011% of the State's energy needs."

Most renewable sources cost much more than traditional sources. This is true even though they are heavily subsidized on the state and federal level.

Consumers should not be forced to pay more for electricity. A renewable portfolio standard (RPS) will mean higher costs for electricity. Utilities will pass on any of the extra costs to consumers.

Solar and wind power have serious environmental problems. They both use a significant amount of land. Wind power is a major enemy of birds, killing them in large numbers. It also kills endangered birds.

Biomass has serious environmental problems as well. According to the Utilities Commission's report on an RPS, "From an environmental standpoint, combustion of biomass leads to many of the same kinds of emissions as the combustion of fossil fuels, including air pollutants, greenhouse gases, and solid wastes (ash)."

References


Analyst: Daren Bakst, J.D., LL.M.
Legal and Regulatory Policy Analyst
919/828.3876 • dbakst-at-johnlocke.org

© 2007 John Locke Foundation | 200 West Morgan St., Raleigh, NC 27601, Voice: (919) 828-3876 | Privacy Policy | Terms of Use