Support governor’s veto of ‘Sunshine Tax’
One of the first orders of business in the 2017 Maryland General Assembly Session is to act on vetoed bills. The Renewable Energy Portfolio Standards (RPS) Revision legislation of the previous session is a tax increase upon every single electricity ratepayer in Mar yland.
I was a vocal opponent during bill hearings and voted against this legislation in committee and on the Senate floor. Gov. Larry Hogan has vetoed this legislation preventing it from becoming law, dubbing it the “Sunshine Tax.”
In the vote to sustain the Governor’s veto, the question before my General Assembly Colleagues is whether Maryland’s ratepayers should bear the cost of increasing and accelerating renewable energy compliance levels to 25 percent by 2020.
I do not believe the ratepayers should bear this cost as there are simply no measurable benefits to justify it. I will vote to sustain the Governor’s veto and encourage my colleagues to do the same.
Maryland already has some of the most aggressive RPS goals amongst our surrounding states. The current RPS goal requires Mar yland’s electricity suppliers to reach a level of 20 percent renewables by 2022.
Under the existing framework, electricity suppliers must acquire an amount of renewable energy credits (RECs) based on a proportionate share of its total electricity supply. For instance, in 2015, the last year for which data is available, an electricity supplier was required to demonstrate that it retired an amount of RECs equal to 13 percent of the total electricity that it supplied to customers in Maryland.
To achieve the 13 percent RPS goal, it cost Maryland ratepayers an additional $126.7 million in higher electricity costs. Under current statute, as the annual requirement climbs to 20 percent, the cost of compliance will only increase.
Further increasing the RPS to 25 percent in a shorter time frame only compounds this cost. The Department of Legislative Ser vices estimated that the increase will impose an additional $49 million to $196 million on Maryland residents.
If an increase to the RPS was certain to benefit Maryland-based renewable energy generators, it at least could be defensible. But recent experience shows this is far from certain.
In 2015, renewable energy generating facilities located in 15 different states participated in Mar yland’s RPS. What’s worse is that 88.7 percent of the Tier One NonSolar RECs used to comply with Maryland’s 2015 RPS goal came from out-of-state facilities.
To illustrate the amount of Maryland ratepayer dollars going out of state, in 2015 the average cost of a Tier One Non-Solar REC was $13.87. In order to comply with Maryland’s Tier One Non-Solar RPS goal, 5,438,972 RECs were needed from renewable energy generators outside of Mar yland.
Thus, potentially $75 million from Maryland ratepayers went to out-of-state energy generators. It is unthinkable to ask Maryland ratepayers to further foot the bill to subsidize even more out-of-state energy generators.
This is not to say we are against renewable energy goals. Gov. Hogan has committed to growing all sectors of Maryland’s economy, including clean energy. State energy programs have supported such growth.
When the Governor took office in January 2015, Maryland hosted only 258 megawatts (MW) of solar generation capacity. Since then, the number has more than doubled to 643 MW of deployed solar. This increase was a result of Maryland based jobs.
There is certainly an economic benefit in growing Maryland’s renewable energy industry, but until we relax government provided subsidies, there will also be a corresponding cost which all citizens will bear.
The unnecessary acceleration and increase in RPS goals further increases subsidies that will end up in the pockets of out-of-state renewable energy generations; this seals my vote to sustain the Governor’s veto. SEN. STEVE HERSHEY
District 36 – Upper Eastern Shore, Member Senate Finance Committee
Billy Kimbles was named Outstanding Young Farmer.
SEN. STEVE HERSHEY