Study: RPS to cost Nevadans $2.2 billion, 1,930 jobs over 12 years

LAS VEGAS — Government-energy mandates will cost Nevadans $2.275 billion while lowering employment by 1,930 jobs over the next dozen years, concludes a new study from the Nevada Policy Research Institute.

The study, entitled RPS: A Recipe for Economic Decline, details the wealth-destroying impact of Nevada’s Renewable Portfolio Standard, which mandates that NV Energy use renewable-energy resources to supply 25 percent of Nevada’s electricity by 2025. The report was produced by three scholars from the Beacon Hill Institute for Public Policy Research at Suffolk University: David G. Tuerck, Paul Bachman and Michael Head.

Because renewable energy is more expensive than energy from traditional sources, the study finds, the RPS will kick Nevada’s electricity prices 6 percent higher by 2025.

“Increases in electricity costs have a profound negative effect on the economy — similar to tax increases — because prosperity and economic growth depend on access to reliable and affordable energy,” said Bachman. “Since electricity is an essential commodity, consumers and producers of goods will have limited opportunity to avoid the costs added by the renewable standards.

“Over 12 years, Nevada’s RPS will cost families an average of $940 in higher power rates. For the poorest members of society, these energy taxes will compete directly with essential purchases in the household budget, such as food, transportation and shelter.”

The Nevada Legislature is currently considering changes to Nevada’s RPS, including Senate Bill 252, which would not allow energy-efficiency measures to count towards Nevada’s 25 percent mandate.

“If SB 252 passes, the detrimental impact on Nevada jobs and household budgets created by the RPS will only get worse,” said Geoffrey Lawrence, NPRI’s deputy policy director. “Even though Public Utilities Commissioner David Noble recently noted that ratepayers ‘are maxed out,’ many legislators continue to push for laws that will drive electricity prices even higher.

“Government cannot create a more prosperous society by requiring the state’s public utility to produce an essential product through less-efficient and less-reliable means. Anyone who says otherwise is either economically illiterate or willfully misleading.”

The study notes that power provided by wind and solar sources have significant “intermittency” issues — meaning that when the wind doesn’t blow or the sun doesn’t shine, wind and solar power plants don’t produce electricity. Thus, in order to keep the voltage of the electricity grid in equilibrium, so-called “renewable” resources like wind and solar power still require traditional power plants to run, or idle continuously, as back-up generation.

“If the wind dies down or blows too hard, which trips a shutdown mechanism in commercial windmills, another power source must be ramped up or cycled instantaneously,” said Bachman. “Because of these inherent limitations, new wind and solar generation plants do not replace any dispatchable generation sources.”

Added Lawrence: “High electricity prices already limit job creation and restrict Nevada’s economy. Even if the Legislature doesn’t impose new RPS mandates, the RPS currently in place will reduce real disposable income by $233 million over the next dozen years.

“Unfortunately for Nevada job-seekers, businesses and residential ratepayers, many politicians think they can get away with making the state’s economically destructive RPS even more damaging for everyone in the state. They think voters won’t get it.

“Many energy bills of this sort — from NVision to SB 252 — are before the Legislature this session. But they basically only increase the cost of electricity, taking money out of citizens’ pockets and giving it to the political cronies in the renewable-energy business.”

The full study, RPS: A Recipe for Economic Decline, is available at http://www.npri.org/docLib/20130424_RPS-ARecipeforDecline.pdf.