Energy Demand Decreasing as Costs Continue to Rise

New Study: Annual Cost of MA Renewable Energy Policies has Quadrupled in 10 Years

Earlier this morning, the Fiscal Alliance Foundation released a new study examining energy prices in Massachusetts and New England. The study was authored by Lisa Linowes, an energy policy expert with a focus on the costs and deployment of large-scale renewable energy. Lisa has testified before Congress on federal tax policy relative to renewable energy and the impacts of offshore wind development and has participated in numerous debates and presentations on renewable energy.

A full copy of the study is available here.

The study found that New England has experienced an 11.4 percent drop in annual energy demand from 2008 to 2020, yet New Englanders pay 20 percent more on average for each kilowatt hour of electricity delivered to their homes. The study found that as renewable energy and climate policy requirements expand, the costs for ratepayers have increased. This outcome suggests that the promise of alternative energies lowering and stabilizing rates has not been realized.

New England’s renewable energy mandates represent some of the most complex and costly in the entire country. Twenty-six separate programs are active across the six states, with nine in Massachusetts alone. Each covers different technologies with different annual compliance requirements and costs. Entities that sell electricity retail in New England are obligated to satisfy the mandates in every state where their electricity is sold. The annual cost of Massachusetts renewable energy policies has quadrupled in 10 years from $250 million in 2011 to $1 billion in 2020. Cumulatively, this has cost Massachusetts ratepayers $6 billion in increased electricity prices in that period. In 2020 alone, Massachusetts ratepayers were billed an average of $1 billion for its Renewable Portfolio Standards (RPS) policies, which works out to between 2¢ and 3¢ per kilowatt hour of electricity consumed. Given an average monthly consumption of electricity of 600 kilowatt hours per household, the RPS costs each ratepayer as much as $191 a year.

The Regional Greenhouse Gas Initiative (RGGI) has cost ratepayers in the participating states $3.8 billion in higher electricity rates in the period from 2008 to 2020. Fifty-three percent of the cumulative RGGI funds raised went towards energy efficiency programs, however, limited data are available to validate the corresponding cost savings and avoided emissions. For projects where information is available, it appears the cost per carbon ton avoided is significantly higher than the value of the allowances sold suggesting that RGGI is an inefficient use of resources. 

If the region’s climate policies are followed to their expected conclusion of zero emission energy, it will require substantially more ratepayer support and more land and ocean development to accommodate the wind, solar, and transmission infrastructure needed within New England. Yet reporting on these impacts is generally limited, and where available it’s often difficult for the public to follow. It is crucial for all, particularly the ratepayers who are shouldering the brunt of the costs, to be engaged in an honest and informed debate about the region’s energy future.

On Wednesday, the Foundation held a press conference joined by several business owners. The business owners were Rod Egger, owner of Bariatrix Nutrition Inc, Jeff Sheehy, owner of Whittemore Company, and Mark Cohen owner of OPRSystems. Rod is a resident of Wellesley and his company, Bariatrix Nutrition Inc, is primarily located in Canada due to the high energy costs to manufacture in New England. Bariatrix Nutrition is a leading developer and manufacturer of high-protein nutrition products. Jeff is a resident of New Hampshire and his company, Whittemore, is located in Lawrence, MA and produces perlite and vermiculite. These products are used in a variety of market applications in the horticultural, construction, and industrial sectors and their production has particularly high energy requirements. Mark is a resident of Concord and his company OPRSystems, is a commercial and municipal recycling business located in Wilmington, MA. OPRSystems services and processes municipal, commercial, and industrial organizations’ recyclable commodities, including paper, cardboard, plastics, and various metals, as well as shredding and destroying a range of confidential materials.

“Massachusetts cannot be economically competitive until energy prices go down. The focus must go back to the price for the ratepayer, instead of picking winners and losers in the energy market. For the average ratepayer, they feel like their taxes are going up while they are earning less,” stated Paul Diego Craney, spokesperson for the Fiscal Alliance Foundation.

“We are seeing energy consumption decrease, while prices are increasing along with layer after layer of arbitrary mandates for more renewables. The annual cost of Massachusetts renewable energy policies has quadrupled in 10 years. Our region’s renewable energy mandates are some of the most complex and costly in the entire country. We now have twenty-six separate programs across the six states, with nine in Massachusetts. As these separate programs continue to grow, so does the cost for ratepayers,” continued Craney.

“Ratepayers in New England are repeatedly told emission-free electricity will lower costs and benefit the environment. In fact, under the current energy policies, New Englanders will continue to see rate increases that will fund the industrialization of the region’s rich natural areas both on- and offshore, stated Lisa Linowes, an energy analyst and author of the study.

“As a manufacturer located in Canada, I would like nothing more than to bring these jobs to Massachusetts but due to New England’s very expensive energy prices, its cost prohibitive. Our products are sold on an international market, and we cannot afford the very expensive New England energy prices if we want to compete internationally. Policy makers need to bring the attention back to the ratepayers if Massachusetts ever wants to compete with the rest of the county and the world,” stated Rod Egger, owner of Bariatrix Nutrition.

“As the only manufacturer of perlite and vermiculite in the Northeast, our company is at a competitive disadvantage compared to our closest US competitors located in Pennsylvania and Ohio. We use natural gas to produce our products and due to policies that restrict the supply of natural gas, our prices continue to increase along with overall electricity costs. Our products are used in a very wide variety of projects, from construction, to agriculture, to even water filtration. When our energy prices go up, so do the prices of these projects we service. As it stands now, I only have two energy suppliers I can shop with for my natural gas needs. If New England wants to be economically competitive with the rest of the country, it must bring in more natural gas for its energy needs, including for the important manufacturing sector,” stated Jeff Sheehy, owner of Whittemore Company.  

“As one of New England’s largest independent recycling companies, we use a tremendous amount of electricity in order to help our customers and the environment. In the recycling industry, our competition is virgin materials. When the cost for recycled materials becomes too expensive, manufacturers will select new over recycled materials. Driving up the cost of electricity puts New England recyclers at a competitive disadvantage over our competition, which in turn hurts our efforts to be stewards of the environment. Higher recyclable material costs also drive out paper mills from our region, a vital outlet for our scrap. When considering the environmental impact, cost has a tremendous impact on the viability of all sorts of manufacturing in our region, from which many recyclables are generated. Arbitrary mandates and deadlines are truly putting ‘the cart before the horse,’ causing needless destruction without any real environmental improvement. Lowering the cost for the ratepayers should be the primary focus, who are increasingly looking at other places to do business,” concluded Mark Cohen, owner of OPRSystems.

A full copy of the study is available here.