Connecticut on the naughty list: poor energy policy raises energy prices
This time of year, children are told that Santa Claus is making a list and checking it twice to find out who has been naughty or nice. However, Santa isn’t the only one who makes a list every year. Leading experts and organizations across the country also rank states by their public policy. In this ongoing series, we will see which “naughty” lists Connecticut landed on and make small suggestions to help the state be a little “nicer.” Check back every day from now until Christmas for a new entry!
In the cold of winter and heat of summer, many Connecticut residents watch their thermostats closely for fear of suffering a wallet-busting, unaffordable electric, oil, or gas bill. Beyond merely suffering the inconvenience of rooms that are too cold or too warm, the cost to simply maintain habitable conditions is too high in Connecticut. The state’s onerous regulations make its energy some of the most expensive in the nation.
Connecticut is naughty both for energy policy and energy prices. According to the Pacific Research Institute’s most recent 50 State Index of Energy Regulation, Connecticut has a lot of work to do. The state’s regulatory scheme ranks 47 in the country. The Index measures the regulatory burdens placed on consumers and producers of energy by each state, ranking them accordingly.
Connecticut ranked 45 for production regulations, 34 for transport restrictions, and 36 for often-wasteful green energy subsidies. One highlight for the state was for its enhanced degree of market competition. Only five states rated better for allowing consumers their choice of supplier. However, because of the inherently more expensive cost of energy in Connecticut, greater competition can only go so far toward lowering consumer costs.
The U.S. Energy Information Association tracks energy price, consumption, and production among the states, and Connecticut’s high level of energy regulation has even put the state on some of their naughty lists. As of September 2016, Connecticut’s residents suffer the fifth highest electricity prices in the United States, and only 10 states have higher natural gas prices.
For those concerned about growing Connecticut’s economy and seeing jobs come back to the state, the Pacific Research Institute’s Index and the EIA data seem to mesh well. The Pacific Research Institute researchers who authored the Index found a correlation between high economic growth levels and freer energy regulation systems. Increased economic activity, particularly in the commercial and industrial sectors, and increased energy use and production seem to go hand in hand. Unfortunately, Connecticut’s energy consumption is low, as is its growth.
For Connecticut to get on the nice list, and to end up with a freer energy sector and greater economic growth, there are a few potential avenues. The best and clearest way, however, relates to the Renewable Portfolio Standard (RPS) mandate. Originally passed in 1998 but amended as recently as 2013, the law requires at least 27 percent of Connecticut’s retail energy load to come from renewable production.
Despite the high-minded goal, the market can’t efficiently meet such a mandate. Restoring Power: How Lawmakers Can Lower Your Electric Bill was co-authored by the Beacon Hill Institute at Suffolk University and Yankee Institute. The authors predicted negative impacts of the RPS mandate in the form of slow growth and job losses. Unfortunately, that is exactly what our state is experiencing right now. Between 2014 and 2020, the RPS mandate was estimated to cost more than 2,600 jobs and $1,800 in direct, out of pocket expenses for a family of four.
To get off the regulatory and energy price naughty list, repealing the RPS mandate makes perfect sense. The state should focus on buying the cheapest clean energy possible, rather than making economic decisions with political calculations. If they had access to more affordable energy, Connecticut residents would be much more likely to put the state on their own nice lists.