Trump promises lower electricity costs, but incentives and state regulations may hold him back

President-elect Donald Trump campaigned on a promise to lower electricity bills, but a new study by the Heartland Institute shows that utilities have financial incentives to go green. Additionally, there are state-level requirements that may keep utilities on a net-zero path, regardless of any actions Trump takes. 

Trump has signaled that he intends to make good on his campaign promise to pursue American energy dominance. His cabinet nominations have strong energy-champion credentials, and he’s reportedly planning to roll out an energy plan favorable to oil and gas when he takes office. 

Regardless of his intentions, however, there will be political and economic limitations to what he can do. If Trump’s EPA head pick, Rep. Lee Zeldin, is confirmed, Zeldin will likely put the EPA’s power plant rule, which seeks to shut down all coal-fired power plants and limit new natural gas-fired power plants, on the chopping block. 

Critics contend the rule will seriously compromise reliability and affordability of electricity, because it makes the grid more and more dependent on intermittent wind and solar power. The rule, critics say, will also discourage investments in new gas plants and force the closure of coal plants. 

While proponents claim renewable energy is the cheapest form of energy, when the costs associated with turning intermittent power into constant power are included, wind and solar are the most expensive. As more coal-fired power plants have been taken offline, rates have gone up. 

While utilities want to keep rates low for their customers, they may have other financial incentives to add more wind and solar energy at the expense of electricity from coal and natural gas. The Heartland’s “Utilities Are Going All-In On Leftist Net-Zero Agenda” report explains that they can profit from investments in new wind and solar farms. Utility regulators authorize utilities to collect a rate of return on equity, which is usually in the range of 9% to 11%. 

“In other words, if a utility proposes a $2 billion wind power project to replace a perfectly operational coal power plant, the utility is guaranteed $200 million in profit just for construction and emplacement of the wind turbines,” the report explains. 

States also have Renewable Portfolio Standards, which are targets or requirements for utilities to produce a certain amount of their electricity from renewables. 

“If you didn't have a mandate saying 15 or 20% of your energy must come for renewables, which basically says you must produce that regardless of the cost, a lot of these utilities would have never got into it in the first place,” H. Sterling Burnett, director of the Heatland’s Arthur B. Robinson Center on Climate and Environmental Policy, told Just the News. 

With these incentives and regulations, many utilities, the Heartland report shows, have jumped onto commitments to net zero.

Lynn Good, President and CEO of Duke Energy, bragged in 2022 that the company is “leading the largest clean energy transition in the U.S.” 

“Our more than 27,000 teammates rallied behind our mission to achieve net-zero emissions by 2050. Our promise is to continue this momentum. Our five-year enterprise capital plan includes $63 billion of investment, and 80% is directed to our clean energy transition,” Good said in a statement. 

Duke Energy provides electricity to 7.2 million customers in six states in the Southeast and Midwest. American Electric Power, with 5. 6 million customers in Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia, West Virginia, published a “Climate Impact Analysis” report in 2021 promising a commitment to achieving net zero. 

“For the nation to achieve its economy-wide clean energy objectives by 2050 or sooner, as called for in the Biden administration’s climate plan, the transformation of the electric sector is vital,” the report states. 

Federal tax credits also incentivize the buildout of solar and wind energy, even when it’s not needed. Energy analysts Mitch Rolling and Isaac Orr, who publish their work on their “Energy Bad Boys” Substack, explained in a January piece, “The Death of a Wind Farm” that the $26 per megawatt hour tax credit wind farms receive mean that the farms can be profitable even if the price of the electricity they produce goes negative. This happens when there’s more wind energy than there is demand for elec. 

The owners receive the tax credits even if the electricity isn’t needed. Wind farms are saturating the Great Plains, Rolling and Orr show, where the wind resources are high. In this area, the frequency of negative pricing is the highest in the U.S. 

Burnett said that it makes little sense that renewable energy continues to require taxpayer support, if they are indeed as cheap as proponents claim. The tax credits were intended to help a nascent industry gain its footing, but they’re now four decades old. 

“That tells me wind and solar can’t stand on their own,” Burnett said. 

The climate agenda set the U.S. on a path to net zero emissions, and a labyrinth of programs at the local, state and federal level were rolled out to make the energy transition happen. Untangling this won’t likely happen with the change of a presidential administration.