A True Renewables Comparison - Commonwealth Foundation

The Patriot-News over the weekend ran two letters to the editor in response to my op-ed that called for the Commonwealth’s new elected leadership to repeal Pennsylvania’s Alternative Energy Portfolio Standard. Predictably, one was written by a troubled alternative energy industry lobbyist who can’t even tell the IRS the truth, much less opinion page readers.

The lobbyist, PennFuture‘s Jan Jarrett, chose to ignore the substance of my commentary, which highlighted the increased costs caused by renewables mandates while delivering no overall benefits, environmental or otherwise. Instead she delivered her own flawed data points:

Ironically, the same day The Patriot-News ran Chesser’s opinion, the Philadelphia Inquirer was reporting the fact that electricity customers in the PECO service territory will be able to buy 100 percent renewable electricity at a price that is 6 percent lower than PECO’s standard price.

Of course I went to the Inquirer article to see where Jarrett was fudging the facts, and I found this:

The best fixed rates offered for a one-year term are about 8.9 cents per kilowatt-hour, roughly 10 percent below Peco’s price to compare. A typical residential customer who uses 750 kilowatt-hours a month would save $90 a year….

But at least two suppliers are offering 100 percent renewable power at fixed prices for one year: BlueStar Energy Solutions, an Illinois supplier, is offering 9.348 cents per kilowatt-hour – almost 6 percent less than Peco’s default rate. And the Energy Cooperative Association of Pennsylvania, a nonprofit group, is offering 9.79 cents per kilowatt-hour.

Both rates have conditions. BlueStar will assess a cancellation fee for customers who opt out early – $10 for each month left in the contract. And the Energy Cooperative requires a $15 annual membership fee.

So in her letter to the Patriot-News, Jarrett compared the one-year lock-in commitment rate of two renewable electricity providers to the basic off-the-shelf rate (no one-year lock-in) provided by PECO. But if she was honest and made an apples-to-apples comparison, Jarrett would have instead cited (see Inquirer excerpt above) the “best fixed rates offered for a one-year term” provided by PECO (8.9 cents per kilowatt-hour), which beat the one-year renewable rates by .45 cents and .9 cents per kilowatt-hour, respectively.

Digging deeper, these artificially low rates for renewables clearly represent loss leaders for Energy Cooperative and BlueStar. They are operating similar to the way cable and satellite television companies do: They lock you into a contract at a low rate, and then when the introductory phase is over, the rates go up with the hope that customers don’t go to the trouble to switch to a competitor.

Also, Energy Cooperative is primarily a heating oil provider, while the renewable energy they sell is a comparatively small portion of their overall sales. According to their most recent 990 tax return available on Guidestar, the nonprofit reported $8,730,042 in heating oil sales and commissions. Meanwhile electricity sales were $1,658,058 and wind energy sales were a meager $3,079. Membership dues taken in were $31,955.

So looking at Energy Cooperative’s revenue mix, while considering that only a fraction of its electricity sales were attributable to renewables (they also have a 20 percent renewable/80 percent traditional fuels electricity sales plan), the coop can easily absorb the loss that their 100 percent renewable electricity plan would cost.

And what is subsidizing Energy Cooperative’s losses on renewables? Their heating oil sales, which continue to belch those greenhouse gases that Jan Jarrett so despises.