By John A. Charles, Jr.
Rarely has Oregon’s lack of political leadership been as painfully obvious as it is now on the topic of grid reliability.
Most of us take for granted the miracle of electricity. We flip a switch and the lights come on. Computers, air conditioners, smartphones—all powered by the magic of the grid. We don’t care how electricity arrives; we just want it, every hour of the day.
One of the intriguing characteristics of the grid is that electricity must be consumed at the same time it is generated. It cannot be stockpiled the way water can be stored in a tank. As a consumer, you can’t go next door and borrow a cup of kilowatts.
Supply and demand on the grid must be in equilibrium at all times, to avoid blackouts. This makes power generation tricky. Utilities need electricity sources they can count on—known as “baseload” power. They typically use coal, natural gas, nuclear, and hydroelectric generators for this purpose. Those sources with the most operating flexibility—typically gas and hydro—are also used as “peakers,” to alter the power supply so it matches hourly changes in consumer demand.
The Oregon legislature declared war on reliable sources in 2007, when the first “Renewable Portfolio Standard” (RPS) law was passed. The RPS mandated that large utilities procure at least 25% of their power from politically-designated “renewable energy” sources by 2025. The most notable feature of this law was that it disallowed hydro dams built prior to 1995 to count as “renewable” energy—creating the legal fiction that the Columbia River hydropower system did not exist as a clean energy source. The point of this definition was to force utilities to switch to wind and solar.
Legislators doubled the RPS mandate to 50% (by 2040) in 2016. This was referred to by advocates as the “coal to clean” bill. They falsely promoted it as a means to eliminate coal-fired electricity. But the grid doesn’t work that way. Oregon is part of a multi-state network, in which thousands of power sources are being used at any given time. Once on the grid, electricity flows at the speed of light throughout the distribution system, powering millions of toasters, microwaves, and HVAC systems. Coal power is not physically isolated from solar or hydro.
In response to these political mandates, electric utilities are gradually shutting down coal plants in Oregon, Washington, Montana, and Wyoming. Unfortunately, they are proceeding without a clear plan for replacing baseload power. Wind and solar won’t cut it; as “intermittent” sources they fail to produce electricity about 70% of the time.
Oregon’s only coal-fired plant, located near Boardman, is owned by Portland General Electric (PGE). Due to an environmental lawsuit that was settled a decade ago, Boardman is scheduled to close by the end of this year. Electricity forecasters are predicting Northwest power shortages as early as 2020, and deficits of thousands of megawatts later in the decade.
PGE does not have a precise plan to replace Boardman. The utility expects to sign hydro contracts as a transition strategy. But any weather-related power source can disappear quickly, as happened in 2001 when the region experienced a low-water year. The result was a shortage of electricity, and the painful shutdown of the aluminum industry. Some 5,000 jobs in the Northwest disappeared.
PGE also expects to build or buy more wind and solar, coupled with battery storage. But the best utility-scale storage facility in the country can only deliver power for four hours.
We are on the brink of a blackout crisis. Instead of addressing a problem they created—the RPS law—state legislators have wasted the 2020 short session trying to prevent “global climate change” by placing limits on fossil fuel use in Oregon. Even if enacted, this would have no measurable effect on climate, so it is a waste of time and money.
Business leaders and civic groups should demand an end to this insanity. Here’s a short agenda:
First, investigate the possibility of extending the life of Boardman. The facility was designed to run for another 20 years. We should not shut it down unless all of its baseload power can be replaced by other reliable sources, at a reasonable cost.
Second, consider having the legislature refer out a referendum to re-legalize nuclear power. Some of the most cutting-edge research on smaller-scale nuclear energy is being done here in Oregon, but any commercialization will have to take place elsewhere. It’s time for a new conversation on this subject.
Finally, repeal the RPS statute. Operating the grid is complicated enough; mandating the types of power sources utilities can use is only making things worse.
John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research center. A version of this article appeared in the February 2020 edition of The Oregon Transformation Newsletter.
Click here for PDF version:
By John A. Charles, Jr. and Lydia White
The Sierra Club and other environmental groups are objecting to PGE’s plan for new, natural gas-powered generation to help replace the electrical output that will be lost when PGE shuts down the Boardman coal plant in 2020. What these groups should admit is that they are the ones responsible for that decision.
Last March, the Oregon legislature adopted the Oregon “Renewable Portfolio Standard” (RPS), which requires PGE to procure 50% of its retail load from designated renewable energy sources by 2040. This requirement, enacted with few public hearings in the rush of the one-month session, was demanded by environmental groups as a way to burnish the state’s mythical green power credentials.
The RPS is essentially a mandate for more utility-scale wind and solar power. These are known as “intermittent resources” because wind farms don’t generate any power about 68% of the time, while solar goes dead about 71% of the time. Being forced to rely on randomly-failing generators means that utilities must have back-up sources (known as “spinning reserve”) in order to preserve grid reliability.
Electricity cannot be stored like other commodities. As soon as electricity is fed into the grid, it travels at the speed of light through many pathways until it is consumed almost instantaneously by a household, factory, or some other end-user. Supply and demand have to be matched at all times in order to avoid grid failure, or “blackout.”
Right now, wind and solar only account for about 5.69% of Oregon’s electricity supply. As lawmakers keep ratcheting up RPS mandates towards 50%, the need for spinning reserve will go up as well. The only practical fuel is natural gas.
These new gas-fueled plants will be running even when not used, in order to be ready when the windmill blades stop turning or the sun goes down. This will result in wasted fuel and increased air pollution.
If utilities must have spinning reserve, can we predict the need for it? This question was the subject of a paper recently published by the National Bureau of Economic Research (NBER). The researchers found that a 1.0 percentage point increase in the share of fast-reacting fossil generation capacity in a country is associated, on average, with a 0.88 percentage point increase in the long-run share of renewable energy.
In other words: more wind and solar = more fossil fuel use. Oregon legislators rushed through the RPS law so quickly that they forgot about the law of unintended consequences.
PGE and PacifiCorp will both be turning to increased natural gas generation over the next 20 years because they don’t have a choice. Customers want their electricity 100% of the time, not 30% of the time. If environmental groups are offended by the use of more natural gas, they should admit that the 50% RPS requirement was a mistake and ask legislators to repeal it.
John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. Lydia White is a Research Associate at Cascade. This article originally appeared in the Portland Business Journal on January 12, 2017.
A new Cascade Policy Institute–Reason Foundation study finds that wind energy is not suited to be the lone or primary source of a grid’s total electricity, due to its variable nature. If used to produce more than 10-20 percent of a system’s electricity, wind power increases operating costs because it requires expensive storage facilities or continuously available carbon dioxide-emitting backup power generation facilities.
In the Pacific Northwest, the backup to wind power has been provided by the Columbia River hydro system. However, hydroelectricity has even less carbon dioxide associated with it than does wind power. Displacing hydropower from the grid in favor of wind is actually a step backwards from the standpoint of reducing greenhouse gas emissions.
Two factors drive Oregon’s policy preference for wind power: subsidies to producers and Senate Bill 838’s Renewable Portfolio Standards. The Renewable Portfolio Standards force large utilities to procure 25% of their total power from politically designated “green power” sources by 2025. Both policies amount to a multi-billion-dollar tax on ratepayers, with net negative benefits for environmental quality.
As this study shows, policies favoring wind power are a mistake from both an environmental and an economic standpoint. Oregon legislators should repeal SB 838 and all wind power incentives in 2013.
John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.
By Eric Revell
With the passage of Senate Bill 838 by the Oregon legislature in 2007, most electric utilities in Oregon are required to provide certain levels of electricity from so-called renewable resources. The mandate is 15% of electricity from renewable sources by 2015, rising to a target of 25% in 2025.
In the event that a utility is unable to meet the renewable energy mandate with their own resources, they can purchase renewable energy certificates (RECs). RECs are not an actual source of electricity; they are simply trade-able certificates representing the “environmental amenities” of power generated from politically correct sources, such as windmills and biomass facilities. They can be sold by the power generator to a retail utility company in need as a stand-alone certificate, or they can be bundled with the electricity actually produced. Unused RECs can be banked and sold to achieve compliance with green energy requirements at a later date.
While there is nothing wrong with consumers purchasing a fake commodity like a REC of their own volition, the state legislature should not make utilities purchase them simply to comply with expensive green power mandates. The additional costs incurred from REC purchases are passed on to all consumers through higher rates, an encumbrance that will increase as the renewable energy benchmarks continue to rise.
Eric Revell is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.
Testimony of John A. Charles, Jr.
President & CEO
Regarding Oregon’s Public Purpose Tax
May 22, 2012
Oregon’s public purpose tax was enacted in 1999 through the passage of Senate Bill 1149. The tax went into effect on March 1, 2002. The stated purposes were to subsidize “new cost-effective local energy conservation, new-market transformation efforts, the above-market costs of new renewable energy resources, and low-income weatherization.”
Many diverse interests went into formulating the bill, and all participants were clear that the tax would sunset in ten years. For example, Ron Eachus, the chair of the Public Utility Commission at the time, stated:
“[The public purpose tax] provides a reasonable sunset that is long
enough that enables a more competitive market to develop for those
programs and it gives some stability to the financing of these programs.”
He reiterated that, “10 years provides both an assurance of funding and provides some stability and at the same time it provides an opportunity for a competitive market to develop. Then you can decide that the public purpose charge is not needed.”
Rep. King stated, “…[renewables] might require a period of ten years until it could be competitive and survive in a competitive market.”
In 2007, the legislature passed SB 838, which imposed renewable portfolio standards (RPS) on large electric utilities. For reasons never explained, the bill also extended the sunset date of the public purpose tax to 2026. So instead of having the PPT disappear on March 1 of this year – as promised in SB 1149 – ratepayers are facing billions of dollars in rate premiums during the next 14 years. This is a legislative bait-and-switch that should not be tolerated.
During the 2012 interim, the Legislative Audits committee should take a hard look at the history of SB 1149 and ask the proponents why their 1999 predictions were so wrong. And more importantly, if subsidies for 10 years turned out to be inadequate, why should we assume that more subsidies will make the renewable energy industry competitive?
By Nick Sibilla
The Oregon Department of Energy (DOE) has unveiled a bold new plan to create green jobs: investing in human energy. With retrofitted bikes and elliptical machines, people can turn their workouts into renewable energy. Thirty minutes of exercise generate 50 watt hours of human energy, enough to charge a laptop for one whole hour.
Among other sources of green power, Oregon is also a pioneer in human energy. The University of Oregon has spent $22,000 on 20 human energy machines, while in March 2009, Oregon State University had the largest human power plant in the world. Those are some sweaty Beavers.
Inspired by these universities, the DOE will pay all 185,000 unemployed Oregonians to generate human energy. If each jobless Oregonian exercised eight hours a day, five days a week, we could produce 18.5MW[i] of clean power each year. That’s enough electricity to power 2,700 homes! All this is possible, for only $3.3 billion.[ii] Now that’s a bargain.
Since anyone with legs can bike or run, these are the ultimate “green collar” jobs. No skills required. Plus, by investing in human energy, even more jobs will be created: Machines break down—mechanic jobs. Athletes need food and water—concession jobs. Bikers need music to listen to—Steve Jobs!
As you can imagine, all this exercise will be great for our health. In fact, we could eliminate childhood obesity altogether by mandating that kids provide human energy. After all, our children are getting fat and corrupted by violent video games. Our children need to learn a sense of civic duty. What better way to teach them how the government works than by forcing them to do something that goes absolutely nowhere?
More jobs, more clean energy and lower health care costs—it’s a triple win!
Now, I know some free trade capitalists will hate this, but we need to make sure that only Oregonians can have these jobs. We can’t let the unwashed masses from Idaho or Seattle steal our human energy. We need to seal off the border. That’s the only way we can keep our energy local. Plus, think of all the jobs that would be created: construction workers, guards, moat diggers, you name it. Soon, we would have too many jobs—can you say negative unemployment?
But fiscally conservative nattering nabobs of negativity will say it’s insane to pay people to ride bikes to power Oregon. They say clean energy subsidies are completely unnecessary. After a Portland streetcar that costs $50 million per mile and a billion-dollar wind farm, they would have you believe Oregon can’t afford any more gimmicks.
But the DOE’s plan has two sources of funding. The first would be to raise taxes on the rich. Recently, Robert Reich proposed a 70% marginal tax rate. But that’s too low. Instead, that rate should be 100% of revenue. Why? 100% is bigger than 70%. Obviously. Better yet, make the rich give 110%. They can afford it. (And what’s this business calling taxes “marginal?” Too many hard-working, middle-class Americans have to pay taxes. Taxes aren’t marginal: They’re mainstream.)
Second, this plan would sell “human energy certificates” (HEX). Buying HEX would allow people to finance human energy without actually exercising. People who buy HEX receive the benefits of human energy, like sweat, a sexier body and an unflappable sense of moral superiority, all at low, low prices!
We must invest in human energy to save our economy and our planet. After all, people are the ultimate renewable resource.
Nick Sibilla is a research associate at Cascade Policy Institute, Oregon’s premier free market think tank. When he’s not being über-manly, he dabbles in political satire.
[i]100 watt hours per hour X 40 hour workweek = 4,000 watt hours (4 kWh per week)
4,000 X 50 weeks = 200,0000 watt hours per year (200 kWh per year, per person)
200 kWh X 185,000 unemployed Oregonians in May 2011 = 37,000,000 kWh (37,000 MWh)
37,000MWh = convert to MW (divide by the number of hours biked each year [2,000h (40h X 50 weeks)]
37,000MWh/2,000h = 18.5 MW QED!
[ii]$8.50 X 2,000 man-hours per year = $17,000 annual wage X 185,000 unemployed= $3.145 billion
$1100 per machine X 185,000 unemployed = $203.5 million
Total cost = around $3.35 billion
March 24, 2011
Co-Chair Cannon, Co-Chair Gilliam and members of the Committee, my name is Todd Wynn. I am Vice President and energy policy analyst of Cascade Policy Institute, a non-partisan, non-profit public policy research organization based in Portland. Our mission is to promote policies that enhance individual liberty, personal responsibility and economic opportunity in Oregon.
I am here to testify today in support of House Bill 2992.
Economic Costs of Not Classifying Hydro as Renewable
In 2007, legislators passed Senate Bill 838 which established the Renewable Portfolio Standard (RPS). This legislation forces the major utilities to procure 25% of their electricity from renewable energy by 2025. The bill established a narrow definition of renewable energy which specifically excludes the vast majority of energy produced from Oregon’s hydroelectric system.
Cascade Policy Institute’s recently released economic analysis, The Economic Impact of Oregon’s Renewable Portfolio Standard, shows that the RPS with the current strict definition of renewable energy will lead to significant negative economic consequences as only more expensive and intermittent sources of energy qualify:
Over the period of 2015 to 2025, the mandate will cost Oregonians an additional $6.811 billion over conventional power within a range of $4.009 billion and $9.310 billion.
In 2025, the mandates will cost families an average of $247 per year, commercial businesses an average of $1,394 per year and industrial businesses an average of $11,585 per year.
By 2025 the Oregon economy will lose an average of 17,530 jobs, within a range of between 10,025 jobs under the low-cost scenario and 24,630 jobs under the high-cost scenario.
Due to higher home energy costs, in 2025, annual real disposable income will fall by $170 million, within a range of $101 million and $230 million.
Oregon is One of the Nation’s Leaders in Clean Energy Generation
Oregon is ranked 48th out of 50 states in the amount of carbon dioxide and nitrogen oxide produced per unit of electricity generated. The state is also 46th in the amount of sulfur dioxide per unit of electricity generated. This is mainly due to Oregon’s high use of hydroelectricity.
|Emissions (thousand metric tons)||Rank out of U.S. States|
|Sulfur Dioxide (lbs/MWh)||0.5||46|
|Nitrogen Oxide (lbs/MWh)||0.5||48|
|Carbon Dioxide (lbs/MWh)||293||48|
The Energy Information Administration currently considers hydroelectricity to be a renewable energy source. When hydroelectricity is defined as renewable energy, Oregon is third out of the entire nation in capacity and generation of renewable energy, generating more than 60% of its energy from renewables.
In contrast, for the nation as a whole, renewable sources supply approximately eight percent of total electric power generation.
Establishing a strict politically motivated definition for renewable energy does not acknowledge the vast amount of clean electricity that the state is producing and using.
Excluding hydroelectricity from the RPS will also cause significant negative economic impacts on the state’s economy as utilities are forced to increase their percentage of expensive and unreliable sources of energy.
It is best to establish a realistic definition of renewable energy, finally acknowledge our clean energy production and begin reforming a forceful and unrealistic push for expensive renewable energy sources.
 The Economic Impact of Oregon’s Renewable Portfolio Standard, Cascade Policy Institute. March 10, 2011. Available at https://cascadepolicy.org/news/2011/03/10/new-study-forcing-oregonians-to-purchase-renewable-energy-proves-costly/
 Energy Information Administration 2008. Statistics are for 2006.
 Energy Information Administration.
In 2007, Oregon legislators decided they would force Oregonians to purchase renewable energy whether or not they wanted it or could afford it. Legislators proclaimed this would help the Oregon economy and make our energy system more affordable and reliable. They were wrong.
Last year, one in 30 Oregonians had their electricity cut off due to inability to pay, and enrollment in the low-income energy assistance program has increased significantly. On January 1, 2011, electricity rates increased significantly for Oregon households: Pacific Power rates increased by 14.5% and PGE rates by 4.2%. PGE also added a “Renewable Resource Adjustment” to ratepayers’ bills in January 2010. Currently, this rate is set at 0.22 cents per kWh, or approximately $2.13 extra per month, for an average household. Rate increases such as these will be the norm over the next fifteen years as utilities work to comply with restrictive energy policies on the state and the federal levels.
But legislators proclaimed that the 2007 renewable energy mandate would help “accelerate the transition to a more reliable and more affordable energy system.” What went wrong?
Unfortunately, renewable energy costs more than traditional energy sources and is often less reliable. Although generating energy from wind turbines and solar panels is essentially free, the costs of construction, maintenance and integrating inconsistent energy into the grid are prohibitively expensive. Thus, adding more renewable energy will increase costs and cause substantial economic hardships for Oregonians and Oregon businesses.
A Cascade Policy Institute report, The Economic Impact of Oregon’s Renewable Portfolio Standard, exposes the cost of renewable mandates on the Oregon economy. Over the period of 2015-2025, the average Oregonian household will pay an additional $1,706 in higher electricity costs. The average commercial business will spend an extra $9,641 and the average industrial business an extra $80,115. Over the same period, the mandate will cost Oregonians an additional $6.811 billion over conventional power, within a range of $4.009 billion and $9.310 billion.
Higher costs will lead to loss of jobs as well. By 2025 the Oregon economy will lose an average of 17,530 jobs, within a range of 10,025 jobs under the low-cost scenario and 24,630 jobs under the high-cost scenario.
Legislators may be able to justify higher electricity costs if environmental benefits, in terms of reduced emissions, outweigh the costs. However, it is unclear that the use of renewable energy resources, especially wind and solar, actually reduces emissions. Due to their intermittency, wind and solar require significant backup power sources that are cycled up and down to accommodate the variability in the production of wind and solar power. As a result, a recent study found that wind power actually increases pollution and greenhouse gas emissions.
Also, businesses and industries with high electricity usage likely will move their production, and emissions, out of Oregon to locations with lower electricity prices. Therefore, increasing renewable energy in the state will not reduce global emissions, but rather send jobs and capital investment outside the state.
In the end, renewable energy can and should expand according to voluntary purchases that reflect true demand. Government should not be mandating that citizens purchase a product they may not value or cannot afford.
It is time to face the truth. Legislators thought that by forcing Oregonians to purchase renewable energy they could make electricity more affordable and reliable. They were wrong. As a first step, legislators should repeal the renewable energy mandate and other restrictive energy policies before electricity costs spiral out of control. In addition, future energy policies need to be subject to a rigorous analysis of economic costs and environmental benefits.
In 2010, approximately one in 30 Oregonians had their electricity cut off due to inability to pay. Enrollment in the low-income assistance program has increased significantly in the past few years. Part of this was undoubtedly due to the recession, but mandating the addition of more renewable energy to the grid has and will continue to increase electricity rates. Ever-increasing rates will leave even more Oregonians unable to pay their bills.
In 2007, Oregon legislators passed Senate Bill 838 which established a state Renewable Portfolio Standard (RPS), effectively forcing utility customers to purchase renewable energy. A recent economic analysis by Cascade Policy Institute reveals this bill has significant negative consequences which are just beginning to come to light.
Cascade Policy Institute has released a new study showing that the Oregon legislature’s renewable energy mandates passed in 2007 will be costly to citizens and will threaten standards of living and economic recovery.
The Oregon legislature has officially convened, and legislators are hard at work crafting or reforming energy policy. With an economy in recession, budget shortfalls and a recent and significant increase in electricity rates, legislators have much to address with regard to how we generate electricity in this state.
Renewable energy mandates and other restrictive energy policies are just beginning to cause financial burdens to Oregonians and, according to Cascade’s report, over the next 15 years much more damage will be done.
The report, The Economic Impact of Oregon’s Renewable Portfolio Standard, prepared by economists at the Beacon Hill Institute at Suffolk University in Boston, found that mandates forcing renewable energy on ratepayers will increase electricity rates significantly. Between 2015 and 2025, the average Oregon household will pay an additional $1,706 in higher electricity costs. The average commercial business will spend an extra $9,641, and the average industrial business an extra $80,115.
Cascade Report: Think Twice Why Wind Power Mandates Are Wrong for the Northwest
by Todd Wynn and Eric Lowe
New report by Todd Wynn and Eric Lowe highlights the problem with the legislature picking winners and losers in the energy market.
Watch an Interview with Todd Wynn about the perils of forcing wind energy on the grid.
Click through for full report
Renewable Energy Costs for All
By Todd Wynn
Portland General Electric (PGE) customers may have noticed something new on their bills recently. Last month, a “renewable resource adjustment” was added to electricity bills to pay for additional renewable resources like wind power. Even if you are not enrolled in the Green Power Program, all PGE customers are forced to pay for renewable energy. According to PGE, ratepayers can thank their legislators for this added electricity cost.
John A. Charles, Jr. Testimony regarding HJM11 Carbon Sequestration on Federal Timberlands May 6, 2009
Listen to this testimony at 1:00:00-1:03:45 on this audio file.
Mr. Chairman and members of the committee, the assumption with HJM 11 is that we can get something for nothing through the hoped-for carbon sequestration on federal lands, as part of a national carbon rationing program. Advocates hope that the creation of a new type of asset called carbon sequestration offsets, formed literally out of thin air, will help lock up more federal lands into non-harvest regimes. (more…)
Existing voluntary green power programs can increase renewable energy generation without forcing unnecessary costs on the entire population. Just as with organic food, customers who value green power can purchase it. Unfortunately, Senate Bill 838 mandates utilities to provide renewable power that 98% of Oregonians currently choose not to purchase. (more…)
By defining the state’s most abundant energy resource, running water, as “non-renewable,” Oregon’s new renewable energy portfolio standard proves to be arbitrary and punitive. Furthermore, the law excludes many renewable energy power plants in Oregon from counting towards the renewable energy goal for no environmentally significant reason. (more…)
Response to “A Second Look at Microfinance: The Sequence of Growth and Credit in Economic History,” by Thomas Dichter
Microfinance is a mechanism or a practice of providing financial services on a very small scale such as credit, savings or insurance, to the poor. It is a field being thoroughly investigated by academicians and policy analysts because it has the potential to become an important instrument in poverty reduction. Yet, microfinance is not a direct poverty alleviation program. It also calls for a paradigm shift in our perception of the capabilities of the poor. (more…)
In another one of its hyper-ventilating editorials on global warming, The Oregonian today criticized the Bush administration. According to the Portland daily, the administration has refused to require the auto and trucking industries to curtail “the greenhouse gas emissions that an overwhelming number of scientists assert are the major cause of global warming.”
A new tool for helping the poor is proving effective around the world. Microfinance institutions provide small loans and other financial services to low income individuals who are considered unbankable by traditional lending standards, usually because they do not have the collateral to secure a loan from a bank.
These nongovernmental organizations are (more…)