RALEIGH – A handful of House Republicans dealt a stunning blow to state Rep. Mike Hager’s bill to phase out slowly North Carolina’s subsidies, tax credits, and purchase mandates propping up renewable energy companies. Despite this setback, the Rutherford County Republican said he plans to bring House Bill 298 to another committee vote.
“I can bring it forth any time I want to” under House rules, Hager said. “I can bring it up as many times as I want to. Being the chairman [of the Public Utilities and Energy Committee], I would say there’s probably more than a possibility” that will happen.
Six Republicans voted against the Affordable and Reliable Energy Act in Hager’s committee Wednesday, helping to sink it on a 13-18 vote.
“This is a horrible vote for Republicans, and they need to be held to account for it,” said Dallas Woodhouse, state director of Americans for Prosperity. It was among 16 organizations that presented a letter in committee supporting passage of the bill.
“The idea that Republicans believe that ratepayers ought to subsidize out-of-state energy companies that cannot make it on their own in these tough economic times means that they need some serious education, and the people in our districts need to know about it,” Woodhouse said.
Asked if the defections on the majority whip’s bill signal a bigger problem within the GOP caucus, Woodhouse replied, “I don’t know. Good question.”
Hager is the fifth-highest ranking member of the House. As majority whip, it is his responsibility to line up votes and to ensure party discipline.
Hager’s bill previously cleared the House Commerce Committee. With Hager running the vote on his own bill in the committee he chairs, and with powerful House Rules Committee Chairman Tim Moore, R-Cleveland, a member of the committee, it was thought passage would be close, but certain. In the end, even Moore voted against the measure.
“Some not-so-conservatives decided to vote for a bill that extends mandates and subsidies forever,” Hager said. “We presented a bill that’s a conservative bill,” but some Republicans “subsidized a sector of business that would go on forever.”
Asked if he felt betrayed by members of his own caucus after believing he had lined up the necessary votes for committee approval, Hager appeared charitable.
“Obviously I must have miscounted. People voted the way they felt led for their district, and that’s something I’ll always honor,” he said.
Republicans other than Moore who opposed Hager’s bill were Jerry Dockham, R-Davidson, who is vice chairman of the Public Utilities Committee; Ruth Samuelson, R-Mecklenburg; Nelson Dollar R-Wake; Charles Jeter, R-Mecklenburg; and Linda Johnson, R-Cabarrus. No Democrats voted for the measure.
Samuelson has opposed the bill steadfastly, and spoke against it during the committee hearing. The other five Republicans did not respond to requests for comment on their no votes.
Attempts to obtain comment from House Speaker Thom Tillis went unanswered. Tillis committed referred Hager’s bill to four committees, needing approval in each before coming to a floor vote. Conventional wisdom holds that referring a bill to just two committees signals intent to derail and kill it.
Hager remains undaunted. He said he has aligned the 61 votes needed to pass the bill on a floor vote, and has support from the governor’s office and the Senate.
“There’s numerous ways to get the bill out” of committee, he said. One would be to talk to members to persuade them it’s a good bill. Another method would be to break up the legislation and pass it piecemeal.
During Wednesday’s committee hearing, Hager outlined his reason for the need to sunset the renewable portfolio standards guaranteed under Senate Bill 3. That bill was passed in 2007 and requires periodically scheduled increases in the volume of renewable energy to be purchased by utilities, which pass on any added costs to consumers.
A joint study by the John Locke Foundation and the Beacon Hill Institute at Suffolk University in Boston concluded S.B. 3 will cost North Carolina utility consumers $1.85 billion from 2008-21. It will cause the loss of 3,592 jobs, decrease investment by $43.2 million, and reduce real disposable income $56.8 million by 2021.
“This is a bill in which a sector of business is borne on the backs of the consumers, on the back of state government, on the backs of ratepayers,” Hager said. “Why else would you have to have federal tax credits, state tax credits, and a renewable energy credit, and a renewable portfolio for a business to survive?”
John Morrison, chief operating officer of Chapel Hill-based Strata Solar, the largest builder of solar farms in North Carolina, told the committee his company receives nothing beyond the rate set by the North Carolina Utilities Commission.
“So to the point of ratepayers are paying a premium for renewable energy, that simply is not true,” Morrison said. “The objectives of this bill [H.B. 298] will not be realized because there is not an impact to ratepayers of North Carolina for renewable energy that we are now building.”
Summer Lanier, public relations director of Prestage Farms, which has more than 70 company-owned facilities and 1,100 employees in the state, said the family owned and operated pork- and poultry-production company opposes Hager’s bill and would not support any changes to current state law.
“We believe that all renewable energy projects should ultimately be self-sufficient, but it must be understood that there are certain initial market risks associated with the development of renewable energy projects,” Lanier said.
“Accounting for these risks, and without financial encouragement of the as-written legislation [S.B. 3], this state would create a business impasse in the investment of cost-effective, self-sustaining renewable projects,” Lanier said.
Prestage Farms is negotiating the construction of a facility in Bladen County to burn used poultry bedding as a renewable fuel.
“Prestage would certainly see its large waste-to-energy project halted without the support of Senate Bill 3,” Lanier said.
Kent Misegades, director of development at Thales Academy and a an engineer with extensive energy research experience in the United States, Europe, and Asia, offered committee members evidence to show where government-subsidized solar and wind energy programs have failed to live up to lofty expectations.
“Free markets should and do consider all forms of energy production. What is wrong, however, is interventionism in the form of subsidies and mandates always results in higher cost to industry and consumers, lost opportunity costs, less choice, and eventually the collapse of industries created to supply those artificial markets,” Misegades said.
Donald Bryson, policy specialist with Americans for Prosperity, told the committee that the state shouldn’t be picking winners and losers in the energy arena.
“Since 2005 families with household income in North Carolina between $30,000 and $50,000 have seen their energy rates increase by 20 percent in the portion of their income used to pay for energy. That’s not insignificant for low-income households,” Bryson said. “States with some form of RPS (renewable portfolio standards), on average, have 39 percent higher energy costs.”
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