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Look out for green energy scams that cost you greenbacks

By   /   February 17, 2015  /   No Comments

By Justin Katz | Watchdog Arena

For those who have remained hesitant to jump into the great green tug-of-war over climate change, the reason may be the whiff of fraud that permeates it all.  Although most scientists are, as the saying goes, hard-working and honest folks, there is bound to be some bad apples amid the bunch.

It’s tough not to think the bad rap might be somewhat deserved when the stories roll in like another snowstorm over New England: from the fuel-guzzling private planes and helicopters used to get the super-rich to a Davos, Switzerland, so they can talk about saving the environment, to the Oregon governor stepping down amid accusations that his significant other used her connections to win contracts for a green-energy consultancy for which she worked, to mounting suspicion that temperature data is simply being adjusted to make it say what environmentalists need it to say.

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GREEN SCAMS COST GREENBACKS: Although mainstream media touts the profits made through green energy requirements, they actually lose companies–and consumers–money.

The schemes and scams just seem to be everywhere, and one needn’t turn over too many rocks to find them.

In a recent article for the Sunday Providence Journal, reporter Alex Kuffner stated that the leading local energy distributor, National Grid, “will be able to re-sell at a profit the energy and tax credits it buys” from renewable energy providers.

The context makes it clear that the journalist has placed this statement as a correction to “the opposition to renewable energy,” which focuses on the high cost of such sources.  How can the costs be too high if the energy is yielding profits?

Kuffner’s mention of “tax credits” is incorrect.  Suppliers of renewable energy give National Grid “renewable energy credits” (or “certificates”; RECs), each of which certifies that the company has purchased 1 megawatt hour (MWh) of green power.

The primary use of these RECs is for the distributor to prove that it is meeting a mandated “renewable energy standard” (RES), or a percentage of all of its energy that must be procured from a preferred list of technologies.

Currently, National Grid’s energy must be 8.5 percent renewable, which will increase incrementally to 14.5 percent in 2019.  Kuffner’s purpose for writing is to highlight state-level legislation that would keep the requirement growing until 2035, at which point it will be 38.5 percent.

The secondary use of RECs — if a distributor has more of them than it needs for government mandates — is to sell them to other companies that have targets to hit.

The source for Kuffner’s claim of green-energy’s profitability is a form that National Grid submitted to the Rhode Island Public Utilities Commission (PUC).  Using market estimates for sales of both renewable energy and RECs, National Grid does indeed show a “total market value” above what it has contracted to pay renewable energy suppliers.

The problem is that the distributor is not expecting to meet its RES requirement.  In fact, the PUC waived an increase in the standard last year because National Grid couldn’t even find enough RECs on the market to buy.  It is flatly false to suggest that the company “will be able to re-sell” the RECs for a profit.  As for the energy itself, National Grid expects to sell its renewable energy at a 35 percent loss.

Making his article even more misleading, Kuffner goes on to state that the “net effect” of green-energy profitability “is a credit of 32 cents on the typical monthly residential electric bill.”  With the price of traditional energy skyrocketing throughout New England, due to insufficient gas pipelines, the loss on renewable energy is smaller than it otherwise would be, which is what allowed the RECs to make the market value look so high.

The thread of truth to the journalist’s claim about a renewable-energy “credit” is that National Grid breaks its renewable energy activities into two separate line items.  One passes on the cost of its long-term renewable-energy contracts to consumers, and the other passes on the cost of meeting the RES.

In other words, National Grid is giving consumers a “credit” on one line because it was able to sell its RECs to those same consumers on another line.  (Actually, the consumers were forced to buy the RECs by their elected officials.)  The “net effect” is still a whole lot of ratepayer money flowing to green energy companies.

If the legislation to extend the state’s RES passes, then National Grid will have to collect more money from its customers in order to buy more renewable energy at a loss in the hopes that it will collect enough RECs to break even.

Readers don’t have to have the high perspective afforded by a private plane over Switzerland to be suspicious that doomsday environmentalism is just a cover.  The evidence is right there on their energy bills… or it would be if journalists were able and willing to explain it to them.

This article was written by a contributor of Watchdog Arena, Franklin Center’s network of writers, bloggers, and citizen journalists. 

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Justin Katz is the research director of the RI Center for Freedom & Prosperity and managing editor of OceanStateCurrent.com. Find him on Twitter @JustinKatzRI