RGF testimony on SB 489: Arizona State University says 50% RPS would cause that State’s rates to rise 117%

The Rio Grande Foundation strongly opposes SB 489 and testified against the bill on Saturday. I have posted the testimony below, but first must explain that the bill is very complicated. Our main concern is with the dramatic increase in the “renewable” mandate to 50% and the prohibition on nuclear power as a component of the push to “zero-carbon” electricity generation.

In my testimony I cited a study from Arizona State University which found that electricity rates would increase dramatically (in Arizona) if the State moved to a 50% standard. One of the authors went so far as to state “If this is such a clever idea, and it was jobs positive, economy positive, and climate positive, they would already be doing it.”

— Professor of Economics Tim James, who is director of research and consulting at the L. William Seidman Research Institute.

Here’s Paul Gessing’s testimony before the Senate Conservation Committee on SB 489 on Saturday, February 23.

A 2016 study produced by the Foundation by Dr. Timothy Considine of the University of Wyoming estimated that from 2011 to 2020, New Mexico’s RPS would cost rate payers an astonishing $2.3 billion above and beyond what they would otherwise pay for electricity.

We stand by this report and note that other sources indicate New Mexico’s electricity prices rose about 30% since the RPS took effect in 2005. This increase is largely- attributable to the RPS because it occurred at a time when the prices of traditional electricity generation sources, like coal and natural gas, have declined.
In 2018 the Seidman Research Institute at Arizona State University studied the average price of electricity for residential customers if Arizona were to adopt a 50% RPS by the year 2030.

If the 50×30 Plan were adopted the Seidman Institute estimates that electricity rates in Arizona will rise 13.57c/KWH to 29.41c/KWH. This represents a 117% increase on current prices. The study further calculates that the average residential customer bill would increase by $1,936 as a result of the estimated rate rise between now and 2030.

In the real world California has been the most aggressive state in the nation in raising its RPS. The Golden State has seen electricity rates increase by between 60 and 80% thanks in part to that State’s adoption of an RPS that is in the process of rising from 30-35%.

If the goal of this legislation is to reduce carbon emissions it makes no sense to preclude the use of zero carbon nuclear as a means of achieving that goal.

If we are wrong and the studies cited above are incorrect in any way we at the Rio Grande Foundation would never oppose a utility’s decision to change generation sources to achieve savings provided by lower-cost energy sources, but quite frankly we don’t think we’re wrong. To that end, we want a firm rate cap placed into law to provide protection to rate payers.

New Mexicans whether they be businesses or seniors on fixed incomes should not bear the burden of this transition to supposedly cheaper and greener electricity.