Of Molehills and Renewable Energy Purchases

From a commentary by Michael Vickerman, RENEW executive director:

As the Legislature mulls over the pending comprehensive energy bill known as the Clean Energy Jobs Act (SB 450/AB 649), both supporters and opponents have been keeping their artillery banks busy, peppering the airwaves and cyberspace with press releases, position papers, radio advertisements and economic impact studies. It’s a veritable war of words out there.

In pursuit of the larger objective of undermining public support for that bill, several opponents of the energy bill are attempting to manufacture a controversy out of the State of Wisconsin’s purchasing of renewable electricity, an outgrowth of the state’s current energy policy law (2005 Act 141). That law directed the State of Wisconsin to source 10% of its electrical usage from renewable resources by 2007 and 20% by 2011. In the initiative’s first year, the purchase of renewable energy added $1.4 million, or 1.7%, to the state’s overall electric bill.

The critics, led by Rep. Brett Davis (R-Oregon), contend that the state’s purchase is a budget-straining extravagance that taxpayers cannot afford at this time. In a letter sent to the Department of Administration, Davis insinuated that one of the energy purchase contracts amounts to a sweetheart deal for the utility provider, WPPI Energy, because it charged higher premiums than the other two utilities. Davis has asked the Legislative Audit Bureau to review the WPPI contract. WPPI, it should be noted, is a nonprofit wholesale energy provider serving more than 40 municipal electric utilities in Wisconsin.

Before we plunge into the politics behind this puffed-up molehill, a brief primer little on energy pricing is in order.