Constitutionality of
Renewable Energy Mandates in Question
Source : http://www.thecrownmanagement.com/constitutionality-of-renewable-energy-mandates-in-question-2/
In a potentially crushing strike against advocates for
renewable energy mandates, a federal court ruling recently raised the issue of
constitutionality of major provisions of many states’ renewable energy
mandates.
On June 7, 2013, U.S. Circuit Court of Appeals upheld the
Federal Energy Regulatory Commission’s (FERC) position against the state of
Michigan (and other petitioners) in a disagreement over FERC’s proposal to
distribute costs for new power lines to supply millions of megawatts of wind
power in the Great Lakes area. Michigan
believes that this plan would, in essence, require them to pay for expensive
new power lines intended for transmitting renewable energy out of the state.
Based on the law establishing Michigan’s 2008 Renewable Energy Standard, only
renewable energy generated inside its state borders is qualified to fulfill
Michigan’s obligation to utilize 10% of eligible renewable energy sources by
2015.
Speaking for the Court, Judge Richard Posner ruled:
“Michigan’s first
argument—that its law prohibits it from crediting wind power from out of state
in favor of the state’s obligated use of renewable energy by its
utilities—trips over an unbreakable constitutional precedence. Michigan cannot,
without violating Article I of the commerce clause of the Constitution,
discriminate against out-of-state renewable energy (emphasis added).”
Thirty states, including the District of Columbia, have
mandates on renewable energy that require electric companies to purchase a
certain quota or percentage of renewable energy by a projected year. Just like
Michigan which has a clear ban on wind produced in other states from being
allowed into their mandate, other states also “discriminate” against
out-of-state renewable power. When counting mandate compliance, several states
count in-state power at a higher rate than out-of-state power, a practice popularly
labelled as “multipliers”:
Delaware has a 300% credit multiplier for customer-sited,
in-state photovoltaic (PV), a 350% multiplier for a specific offshore wind
project, and a 150% multiplier for all other in-state wind projects;
Colorado applies a 1.25 multiplier for its in-state
generation;
Michigan provides an extra 0.1 credit for projects that use
state-available components and its local workforce;
Missouri grants a 1.25 multiplier for all in-state
generation.
Kansas uses a 1.1 multiplier for all in-state resources;
Moreover, some state renewable policies have a list of
renewable energy grades, where certain power sources can only be utilized to fulfill
a part of the mandate. Others have grade
levels dedicated particularly to in-state power generation that may now be
doubtful in view of the recent decision by the federal court:
New Mexico’s Tier V applies to customer-sited resources;
Massachusetts’ Tier IV exclusively applies to in-state PV
projects;
New York’s Tier II covers customer-sited resources.
The new ruling is significant since one of the main points
raised by mandate proponents is the creation of jobs in the concerned
state. Certainly, these claims merely
consider the overall “green” jobs provided, while totally neglecting the loss
of net jobs resulting from increased electricity rates arising from these
mandates. The federal court ruling might just end up nullifying the argument
for in-state green-job employment since renewable power can be imported
out-of-state to comply with the mandate.
Lawmakers in these states with power mandates may now
question the value of raising electricity rates on their state power consumers
for the purpose of subsidizing “green” job creation in another state nearby. In
the end, what this ruling has done is to unravel the problems and complexities
with a market for renewables that has been created through government policies.
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