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‘Missouri Clean Energy Initiative’ Fraught With Hidden Costs

October 21st, 2008 by mopns · No Comments

By Jacob Voss

To date, 26 states have adopted renewable energy standard (RES) laws, which require energy utilities to derive a specified percentage of electricity from renewable energy, by a particular date. These standards range from 8 percent in Pennsylvania by 2020 to 40 percent in Maine by 2017. In November, voters will decide on a measure that would place similar obligations on Missouri’s three investor-owned utilities. The “Missouri Clean Energy Initiative” requires AmerenUE, Kansas City Power & Light, and Empire District Electric to produce 15 percent of their electricity through renewable sources by 2021.

The initiative has some merit. Increasing production of renewable energy would decrease our dependence on coal, lowering fossil fuel costs. It also has the potential to create jobs and reduce carbon emissions, a major concern in Missouri because the state now derives more than 80 percent of its power by burning coal. A diverse energy portfolio would lead to stability in long-term power rates, reducing energy bills. There is, however, a significant problem with the “Missouri Clean Energy Initiative,” and any mandatory RES: the tight government regulations binding power utilities.

The initiative outlines a tight timetable for Missouri’s investor owned utilities, specifying that 2 percent of produced energy must be renewable by 2011, with at least 15 percent meeting that standard by 2021. The energy law now in effect, the “Green Power Initiative,” has similar goals. It encourages, but does not require, 4-percent renewable energy by 2012, with 8 and 11 percent required by 2015 and 2020, respectively. The new RES would fine utilities if they are unable to reach mandated percentage levels by the corresponding year. It also caps rate increases at 1 percent annually, a provision intended to prevent price spikes. Read more…

Jacob Voss is an intern at the Show-Me Institute. He is currently pursuing a bachelor’s degree in economics at Saint Louis University.

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