The Bluegrass Institute for Public Policy Solutions

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Study shows renewable energy mandates would increase energy costs for Kentucky

Jim Waters

According to “The High Cost of Renewable-Electricity Mandates,” a recently released report from the Manhattan Institute, states that have mandated Renewable Energy Portfolio Standards (RPS) have experienced significantly greater rises in the price of energy over the past decade. The study also finds that the states with the highest energy prices tend to be states requiring RPS. The study revisits a very serious question to Kentuckians – just how great are the costs of abandoning proven energy sources, like Kentucky coal, for unproven but renewable sources?

The study presents six key findings when comparing RPS and non-RPS states:

  1. In 2010, the average price of residential electricity in RPS states was 31.9 percent higher than it was in non-RPS states. Commercial electricity rates were 27.4 percent higher, and industrial rates were 30.7 percent higher.

  2. In the ten-year period between 2001 and 2010—the period during which most of the states enacted their RPS mandates—residential and commercial electricity prices in RPS states increased at faster rates than those in non-RPS states.

  3. Of the ten states with the highest electricity prices, eight have RPS mandates.

  4. Of the ten states with the lowest electricity prices, only two have RPS mandates.

  5. Sixteen of the 18 states with residential rates that are higher than the 2010 U.S. average residential rate are RPS states.

  6. Nineteen of the 21 non-RPS states have residential rates that are below the U.S. average.

Significant for the Bluegrass State is the finding that of the states relying most heavily on coal for their energy needs, like Kentucky, RPS coal-dependent states have residential energy rates 37.6% higher on average than non-RPS coal-dependent states. Such news should come as a warning to a state like Kentucky which is currently considering enacting RPS legislation.

Currently, 29 states and the District of Columbia have enacted RPS. Kentucky is free from such mandates, but as previously reported, Kentucky House Bill 167 threatens to introduce such sweeping energy changes to the commonwealth. HB 167 is currently under review in the House Tourism Development and Energy Committee.