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Arizonans will face higher electricity costs under clean power plan

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Energy poverty is on the rise across Arizona today.

If you spend more than 10 percent of your income on electricity, natural gas, and other household energy costs, then you are afflicted by energy poverty.  It is a tragedy that forces some families to choose between keeping the lights on or putting food on the table, because they cannot afford both.

winegarden-wayne

Wayne Winegarden

More and more people are facing this dilemma.  In a 2011 survey, 52 percent of respondents said that they were having a more difficult time affording their energy bills compared to the prior year.

Unfortunately, energy bills could become even more unaffordable if a misguided plan being pushed in Washington, D.C.,  goes forward.  The so-called Clean Power Plan aims to reduce greenhouse gas emissions generated by power plants.  Several states, including Arizona, sued the federal government, arguing that the Obama administration did not have the power to implement the plan without an act of Congress.  It is currently being reviewed in federal court.  The Clean Power Plan’s future is also in question now that Donald Trump has been elected President.

How would the Clean Power Plan affect Arizona’s electricity bills?  I recently authored a new study with the Pacific Research Institute called, The Clean Power Plan’s Economic Impact.  It explores how the new government mandates in the Clean Power Plan would impact household electricity costs, and the power bills of all Arizona residents.  You can read the study – and view an interactive map to see what it will mean for your community – atwww.pacificresearch.org.

My research found that the Clean Power Plan will raise electricity costs across Arizona, disproportionately impacting low-income communities in Maricopa County and surrounding areas.

Poor families in Maricopa County could face average annual electricity costs equal to 11.32 percent of their income once the Clean Power Plan is fully implemented.  On average, Arizona residents could soon find themselves paying nearly $1,600 a year for electricity.

Average annual electricity costs could increase by 10.3 percent for Maricopa County residents under the Clean Power Plan.  Nearby, in Yuma County, average annual electricity costs could increase by 10.4 per-cent.  Pinal County residents could see their energy burdens rise 10.3 percent.

The Clean Power Plan is yet another example of a big government program from Washington, D.C., that, despite its intentions, creates unintended consequences that overwhelm any potential benefits.

In this case, Arizona residents and millions of others could soon endure a harsh economic reality for a program that won’t meaningfully reduce emissions or improve the environment.

Perhaps the biggest concern about programs like the Clean Power Plan is that they will trap more people in a life of poverty.

The federal government provides financial assistance to help the poor afford the high costs of energy.  The number of U.S. households receiving energy assistance from the government was 40 percent higher in 2014 than before the Great Recession.

The poverty trap ensnares families because rising incomes threaten their eligibility for assistance programs.  Ironically, Arizona’s poorest families may find that they are better off financially if they do not try to work their way up the economic ladder in favor of remaining eligible for their current energy subsidies.

Instead of looking to government for big programs and costly new mandates, we should look to the free market.  By encouraging innovative, market-based solutions, we can reduce emissions in Arizona and across the country – without increasing costs to taxpayers or pushing more into a life of energy poverty.

— Wayne Winegarden is a senior fellow in business and economics at the Pacific Research Institute.  He is also the principal of Capitol Economic Advisors and a contributing editor for EconoSTATS. 

3 comments

  1. “Only fossil fuels will keep us going. We need more pollution. We need more mercury in our air, waters, soil, and children. We need to support our hospitals by increasing carbon-related asthma.” Geez, talk about selection bias. Really believe your spin? Live next to an ash disposal pond. Drink water downstream from a coal mine. Live downwind from a coal-burning power plant.

    Try the other myriad of studies that, when looking at the FULL picture instead of limited factors, shows a nation much better off.

  2. Lovely. Another unbiased opinion from a climate denying, Koch Brothers funded, big pharma funded, oil company funded “think” tank. I think the Pacific Research Institute stopped putting out their annual climate denial report in about 2007. The effort to convince the poor that solar energy users and producers are hurting them is and always has been rubbish. Even energy giant Duke admitted that solar producers and users had zero impact on other Duke energy customers. This fear mongering started in 2012 or earlier — that’s when I saw the first Edison Electric Institute funded commercial — the year after Arizona “Public Service” (APS) urged us to install rooftop solar at our own cost, which was considerable, so that other users would not have to pay for more infrastructure. Was APS lying in 2011 or 2012? I hope that it is obvious by now that this alleged “free market” group is not for a free market at all — they want a rigged market in which their funding sources don’t have to compete, and enjoy a government mandated large profit in perpetuity. Welfare for the rich. They don’t care about poor people even a little bit. The rationale for privatizing public utilities in the not-so-distant past was allegedly to drive down energy costs by creating free market competition. And yet, amazingly, the free market savings that we were all supposed to enjoy never happened. A very conservative small city in Texas, Georgetown, went to 100% renewable energy sources because, they said, they put pen to paper and it made fiscal sense to go that way. It was a simple accounting decision. Other cities have done the same thing. Human beings deserve cheap, clean energy, clean water, and breathable air; without the last two, life as we know it on Earth will cease to exist.

  3. The Pacific Research Institute is a think tank funded by the Koch Brothers to, among other things, convince us all that global climate change is not real and promote the fossil fuel industries. Take anything this organization says with a grain of (very skewed) salt. They promote free market solutions to complex problems facing us all. Sometime the free market is the right actor, but in many cases, such as climate change, it is not.

    Sometimes government (the collaborative action of the population working together) is the only way to tackle intractable challenges like man-made climate instability. The free market depends on a profit motive to work, and there are lots of problems and needs that the marketplace can address appropriately. But there is little profit in responsible and sustainable energy policy, so little incentive for the free market to respond.

    The pretense that clean energy could harm the poor is a red herring, meant to make us all feel better about allowing warmer climates to disproportionately harm the poorest among us. The Kochs will do fine in an era of climate change, but the poor will have few resources and even less political influence on the true cots it will cause us all.

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