Renewable energy advocates and Xcel Energy often claim that electricity bills in Minnesota are 22 percent below the national average to bolster support for renewable energy sources. By focusing on bills, rather than prices, these groups make it appear as if Minnesota electricity customers are getting a good value on their electric bills relative to their peers nationally.
But in reality, wind and solar have caused Minnesotans to pay more money, even though they are using a lot less electricity.
Data from the Energy Information Administration show that Minnesota is in the bottom 20 states for electricity expenditures. In fact, electricity bills in Minnesota are lower than those of residents living in 30 other states. However, this isn’t because we have low prices, it is because we use less electricity.
To be sure, Minnesota is in the bottom 20 of states in terms of quantity of electricity used. Before we start patting ourselves on the back, though, it is important to understand that the main reasons we use less electricity is because 66 percent of households in our state use natural gas for heating, whereas many areas of the country, including southern states, use electricity as their primary heating fuel and they also use far more electricity for air conditioning than we do in Minnesota.
And this brings us to the point we often raise, namely that Minnesota’s electricity prices have risen by 20 percent in 2017 dollars since we enacted our 25 percent renewable energy mandate in 2007. In fact, Minnesota now ranks in the top 20 states for highest electricity prices, but it wasn’t always that way.
Minnesota’s electricity prices used to be nearly 20 percent below the national average, giving our state a competitive advantage in energy intensive industries like manufacturing, mining, farming, and healthcare. That advantage is now gone.
The skyrocketing cost of electricity is one reason why our bills have gone up 8 percent in inflation-adjusted dollars even though our per-capita electricity consumption has fallen by 10 percent, as shown in the graph below. In essence, Minnesotans are paying more for their electricity, even though they are using a lot less.
Renewable energy advocates’ fixation on bills relative to the national average rather than prices, is a disingenuous sleight of hand that allows them to make it seem like Minnesotans are getting a deal on their electric bill, when in reality our bills are only lower than those of residents living in other states because we use less electricity than the national average.
In short, we’re not getting a deal on our electricity. We’re paying more for less.
Isaac Orr is a policy fellow at Center of the American Experiment in Golden Valley.