June 6, 2008

Ignoring a Force of Market

Justin Katz

Here's a statement that I've read multiple times with reference to "alternative energy", specifically the bills to provide incentive to National Grid to buy it that have just passed the RI House:

Matt Auten of the advocacy group Environment Rhode Island denied that renewable energy would drive up electricity costs, describing the bill instead as a "prudent response to skyrocketing prices for electricity [and natural gas] because it will lock in a fixed price not tied to polluting fossil fuels for a portion of Rhode Island’s electric needs."

What am I missing in the provision of "alternative energy" that makes it free from market forces? As far as I can tell — letting legislators mandate what they will — the price of any energy will ultimately be "tied" to non-alternative energy prices, among other things. (One can foresee future conversations about the lack of wind in a given year.)

And that doesn't take into consideration the side effects of solidifying National Grid as a state monopoly through mandates and regulations.