NCPA - National Center for Policy Analysis


March 22, 2010

The myth that renewable energy is cost-competitive with conventional power sources is taking another hit, as Los Angeles has announced a 5 percent hike in electricity rates to subsidize uneconomical wind and solar projects, says the Heartland Institute.


  • Enormous subsidies and preferential tax treatment already give wind and solar a tremendous competitive advantage over conventional power generation, yet wind and solar power are still substantially more expensive than coal and natural gas power.
  • The 5 percent rate hike, which city officials say is equivalent to a carbon tax, will not change that.
  • More subsidies will be taken out of the wallets of hardworking electricity customers and given free of charge to noncompetitive, inefficient solar and wind industries.

Renewable energy apologists often assert that renewable energy subsidies are necessary to "level the playing field" regarding subsidies given to coal:

  • According to the U.S. Energy Information Administration, however, solar power already receives more than $24 in subsidies per megawatt hour of electricity produced.
  • Wind power receives more than $23 dollars per megawatt hour.
  • Coal power, by comparison, receives less than 50 cents per megawatt hour.

Los Angeles Mayor Antonio Villaraigosa says the price hike/carbon tax will bring jobs to the city, where the unemployment rate is 12.5 percent.  The carbon tax will result in "the creation of thousands of green-collar jobs," said Los Angeles chief deputy mayor Jay Carson, as reported in the New York Times.

Taking money out of productive sectors of the economy by substantially hiking electricity prices and giving the money to noncompetitive, inefficient industries will not create "thousands of green-collar jobs" in Los Angeles, nor will it create even one net job.  In fact, it is more likely that it could destroy at least 1,000 jobs, says Heartland.

Source: James M. Taylor, "Los Angeles Hiking Electric Rates to Subsidize Wind, Solar," Heartland Institute, March 12, 2010.


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