Delaware’s ‘Green’ Energy Policy Hurts the Poor and Robs the Middle Class

We are taking money from the poor and giving it to the rich! Misguided energy policies have put the state in the role of the anti-Robin Hood.

The poor and middle class can’t afford solar panels but they pay for them anyway. A typical solar installation costs about $35,000. Even after government subsidies, a homeowner would need a $19,000 down payment to install solar panels; this is serious money lower income people don’t have. A typical government purchase subsidy is $16,000. This is equal to the entire federal, state, and local tax bill of two average American families being transferred to one affluent family. The panel owner can also sell Solar Renewable Energy Credits (SREC), worth several thousand dollars a year. The total value of subsidies and SREC’s, all paid by others in higher electricity and tax bills, can be as high as $58,000 for the $35,000 system.

The pain for Americans in the bottom half of earnings does not stop with subsidizing the solar panel purchases. The cost of Delaware participation in the regional cap and trade program, and government dictates that require your electric company to buy high cost renewable power are also included in your electric bill. For example, power from solar panels cost six times power from conventional sources. We estimate these “green” initiatives will add at least 20% to electricity bills.

The economic consequences go on. A recent study1 by the Delaware Economic Development Office found Delaware industry is threatened by high electricity costs, 50% higher than other states. We have already lost tens of thousands of manufacturing jobs over the last two decades. High electricity prices make it less likely factories will expand or locate here. Thanks to job killing environmental over regulation, electric generation capacity has not kept pace with our electric consumption, so we now import 60% of our electricity from out of state sources. This situation, by itself, has cost the poor and middle class opportunities for a thousand jobs in the power generation sector.

There is some money available for help with utility bills, weatherization programs, and the purchase of solar panels for the very poorest families. However, the weatherization program has been run so poorly it was shut down for over a year. Ending these expensive renewable energy programs would help more with electricity bills than the utility assistance funds. Proponents say renewable energy programs will add jobs. The problem is the “green premium” for renewable power has been shown to eliminate two to eight jobs elsewhere for every “green” job created2.

The 40% of Delaware families earning less than $50,000 a year have discretionary income of about $2000 a year 3. Discretionary income is what is left after taxes and the basics of life are paid; it is sometimes called “happy money”. State energy policies could eat up half the discretionary income for those families. There is another way. We need clean, affordable generating capacity in Delaware fired by nuclear power and natural gas! We also need to repeal expensive energy legislation that hurts the poor and middle class, such as the Regional Greenhouse Gas Initiative and the Renewable Portfolio Standard, to reduce the cost of electricity in Delaware and to secure our economic future. It is time for practical, common sense solutions.

David T. Stevenson, Director
Center for Energy Competitiveness
Caesar Rodney Institute

1 – Analysis of Delaware’s Economy, Delaware Economic Development Office, Sept 2010
2 – Study of the effects on employment of public aid to renewable energy sources Gabriel Calzada Álvarez PhD., Universidad Rey Juan Carlos, The Impact of the Delmarva/Blue Ware Wind Power Purchase Agreement on the Delaware Economy, Edward C. Ratledge, Director, Director, Center for Applied Demography & Survey Research at the University of Delaware
3 – The Conference Board, 2007 Report on Discretionary Income

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