Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

08 August 2010

The Massachusetts Wind Power Rip-Off

David Tuerck, chairman and professor of economics, and Jonathan Haughton, professor of economics, both at Suffolk University, have written up the story of Cape Wind Associates, which plans to build 130 wind turbines in Nantucket Sound at a cost of about $2 billion.  Cape Wind has claimed it would produce renewable energy at a savings to electricity users in New England of $25 million per year.  National Grid, which provides 40% of Massachusetts' residential power, has just bought half of the output of Cape Wind's Nantucket Sound facility at a cost of $0.21/KWhr, with a 3.5% increase each year.  Under the Massachusetts Renewable Portfolio Standard program, the state allows an extra charge of $0.06/KWhr for renewable energy generated electricity which must be paid by the user.  The conventional source electricity cost to National Grid is only $0.09/KWhr, so the normal renewable energy cost is $0.15/KWhr.  The Cape Wind cost doubles the normal additional charge for renewable energy.

Not only is there no savings of $25 million per year, but ratepayers will now have an additional charge of $82 million per year thanks to the pressure on the electric power suppliers to use more renewable energy.  If it actually were the case that it was important to use renewable energy, Canadian suppliers are happy to provide hydroelectric and wind power electricity at a cost of $0.15/KWhr, not the $0.21 of Cape Wind.  What is more, the Federal Energy Information Administration does not believe the real cost of conventional electricity will rise in the next decade, so these inflated alternative energy costs will likely remain inflated for at least that long.

Many states now have programs mandating the increased use of renewable energy for electricity generation and pass the increased costs to electricity users.  Many companies are eager to provide this uneconomic service to take advantage of the higher rates they are allowed by the states and which the citizens are forced to pay.  It is a heyday for alternative energy special interests to make money hand over foot to provide unneeded electricity.  Or to be more precise, it should be unneeded.  When the states refuse to allow the generation of electricity by conventional means, electricity users are simply forced to pay the outrageously high rates to line the pockets of uncompetitive company investors and probably their bought political hacks.  This is an abuse of power.

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