Big Electric Bill? Thank the Energy Subsidies

 Rahm Emanuel’s op-ed “Big Electric Bill? Thank Trump” (Sept. 18) demonstrates an ignorance of basic economics. Mr. Emanuel claims that subsidies paid to green-energy providers reduce the cost of electricity. The opposite is true. The billions of dollars paid out to green-energy providers—almost $70 billion for wind and solar alone between 2020 and 2023—don’t come down from on-high. Taxpayers foot the bill.

The Trump administration’s opposition to offshore wind subsidies, which Mr. Emanuel attributes to the president’s “pique,” is the most egregious example. The long-term contracts for the electricity output of these facilities are at prices up to four times as high as average electricity wholesale prices. Mr. Emanuel doesn’t explain how forcing ratepayers to pay far-above-market prices, as well as the additional ancillary costs required to compensate for the inherent variability of wind and solar power, reduces electric bills.

Economists know that subsidies merely provide an anticompetitive cushion for generators that can’t compete in the market. Subsidies remove the need to innovate and reduce costs. Some will argue that wind and solar are “infant” industries, but both have been subsidized for almost 50 years. Surely, a half-century is sufficient time for the infants to have matured.

I can agree with Mr. Emanuel on at least one point: “Americans aren’t stupid.” They understand the green grift well.

Jonathan A. Lesser

National Center for Energy Analytics

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