Market-Oriented Watchdog Warns on Rising Energy Costs
Bariatrix Nutrition said high energy costs forced it to move manufacturing to Canada. (image courtesy of Bariatrix)
A group of business owners warned Wednesday that efforts to transition Massachusetts to renewable sources of energy have hamstrung them with higher costs at a time when policymakers are grappling with how to make the state more competitive.
Joining a virtual event where the Fiscal Alliance Foundation presented research about ratepayer impacts from renewable energy, several business owners -- including some aligned with the advocacy group -- voiced frustration about the focus devoted so far to building out solar, wind and other forms of clean electricity, often using government incentives and mandates.
Rod Egger, the president of Bariatrix Nutrition, said the manufacturing sector and especially food product manufacturing "is not an industry that has a large margin that you could absorb high energy costs with."
"The energy input costs are something that's very material when we make business decisions, and the increase in costs in New England per kilowatt hour is essentially rendering the New England states non-competitive for some manufacturing, whether the food industry or some other primary industries that have a high energy input," said Egger, a Wellesley resident whose company is located in Canada. "These are serious topics that have to be addressed because if the present policies continue, we'll see a deterioration in the manufacturing base throughout New England as companies make decisions to produce products outside the region."
The right-leaning foundation published a new report at its event that found while annual energy demand across New England dropped 11.4 percent from 2008 to 2020, the region's residents in that span paid an average of 20 percent more per kilowatt hour of electricity for their homes.
Author Lisa Linowes, who is executive director of the WindAction Group founded to provide information about "the potential harmful impacts of large-scale wind energy facilities on wildlife and the natural environment," said the rising costs that ratepayers face are partly a result of state-level efforts to move away from fossil fuels.
"Obviously, there is the distribution costs and the related utility costs for not the transmission side, but the distribution side of delivering the energy to ratepayers or to their homes. But that extra push that's holding those prices up -- that's what appears to be coming from renewable energy and climate policy," Linowes said, adding, "If the rest of the United States is looking at 13 cents a kilowatt hour and we're looking at 21, 22 cents a kilowatt hour, that delta is composed in part by these policies."
The push to achieve net-zero greenhouse gas emissions by 2050, which Massachusetts lawmakers and Republican Gov. Charlie Baker codified in state law in 2021, seeks to usher in a sea change in how the state generates the power needed to heat homes, run vehicles and keep the lights on.
That features a series of escalating requirements for renewable sources to become more and more of the state's total energy picture, as well as government-funded incentives for steps like the buildout of electric vehicle infrastructure.
Linowes's report said renewable portfolio standards policies in Massachusetts have cost ratepayers a total of $6 billion since 2011, with annual costs rising in that time from $278 million in 2011 to $1 billion in 2020.
Policymakers are hoping to reduce greenhouse gas emissions, which scientists have repeatedly linked to worsening storms, negative health outcomes and other dire climate change impacts, often alongside warnings that time is nearly out to alter the course.
Mark Cohen, the chairman of the Massachusetts Fiscal Alliance and CEO of recycling firm OPRSystems Inc., said at Wednesday's event he thinks state leaders have been "misguided" in their pursuit of reining in emissions because Massachusetts alone "won't have any real impact on the worldwide environment." He said he would prefer to see action at a national or international level.
"We can ride on our high horse, but what's that going to do for us? It needs to be a more gradual transition," Cohen said. "Yes, everyone loves renewables. But you've got to look at cost-benefit somewhat, too, and I don't think the state does that."
Linowes added that she believes "the policies themselves have become the goal, not the climate change concern."
"Whenever there's a risk of a project, a possible project not getting built, a renewable energy project, or a climate policy not being met, it comes back at the states and says, 'You need to meet this because you have this policy,'" she said. "I'm hoping that there'll be a resetting of thinking and establish: what is the real goal here? Is it to meet the policy or to address the climate change problem?"
A full copy of the study is available here.