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Subsidizing inefficiency

Subsidizing inefficiency

Parrish Miller
November 26, 2014
November 26, 2014

Idaho Power customers will soon be forced to subsidize an additional 461 megawatts of solar-generated power thanks to a federal law mandating that Idaho Power purchase power from less efficient “green” producers at the same rate it would cost the utility to build its own, new natural gas plant. This mandate requires power companies to pay what is known as the "avoided cost" rate.

Despite the fact that solar power is both more expensive and less reliable (due to changes in the availability of sunlight), government is still mandating its use rather than more affordable and reliable hydroelectric, clean coal and natural gas.

Unlike most commodities, where those who purchase more get better rates, electric power is being rationed through anti-market pricing structures that are designed to discourage consumption. Currently Idaho Power jointly owns two coal-fired power plants, but radical environmentalists are actively trying to get these efficient methods of production shut down. The natural market forces that should be keeping prices low and supply abundant are being thwarted both on the supply and demand sides of the equation because of government and its allies in the environmental movement.

Instead of forcing consumers to subsidize inefficient power production, government needs to get out of the way and let the free market work unimpeded by regulation and cronyism. If and when solar power becomes economically viable, it won't require mandates to guarantee its use because power companies will be clamoring to buy it. Until that day comes, however, we should be focusing on the most affordable methods of generating power—not those that appease anti-capitalist radicals.

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