Traverse City Record-Eagle

Opinion

May 12, 2013

Forum: Don't look to Germany as energy model

By Rachel Johnson

The average cost of electricity for a German household has risen by 66 percent since they established a feed-in-tariff (FiT) system in 2000.

A recent opinion piece in this paper suggested that Michigan should look to Germany as a model for future energy policy. The author, Patrick Timmons, pointed to the boom in renewable generation in Germany — last year 25 percent of Germany’s electricity came from renewable sources, up from 6 percent when the policy was enacted in 2000.

The FiT system has effectively incentivized renewable generation, but at a cost. To understand the cost, we must first consider exactly how a FiT works.

FiTs are a generic description for a policy that pays a price, a “tariff,” for the electricity generated by renewable sources of energy that is “fed” into, or sold to, the grid. The FiT rate is what the person who generated the electricity is paid for the energy they create.

Consumers who generate electricity sell it all onto the grid at the FiT rate, they then buy back their own electric usage at the market rate. The requirement for utilities to buy electricity for as much as twice what they can sell it gets passed on to ratepayers.

Tariffs are not taxes; they are set rates paid for commodities like electricity. Germany’s FiT rate is based on the cost of generation plus a 5 to 7 percent profit.

Some might argue that FiTs are worse than taxes. They are government-mandated fees assessed to ratepayers without regard to income. This makes them very regressive; lower-income families who may already struggle to keep the lights on are most vulnerable to rising electricity costs.

At Cherryland Electric Cooperative, we have an abiding commitment to doing what is best for our members. Often, that means defending their access to affordable and reliable electricity. That’s why we are so excited about our new community solar project.

Text Only

Opinion Poll
AP Video
Raw: Magnitude-7.2 Earthquake Shakes Mexico City Ceremony at MIT Remembers One of Boston's Finest Raw: Students Hurt in Colo. School Bus Crash Raw: Church Tries for Record With Chalk Jesus Raw: Faithful Celebrate Good Friday Worldwide Deadly Avalanche Sweeps Slopes of Mount Everest Police Arrest Suspect in Highway Shootings Drought Concerns May Hurt Lake Tourism Vermont Goat Meat Gives Refugees Taste of Home Calif. Investigators Re-construct Fatal Bus Cras Mayor Rob Ford Launches Re-election Campaign Appellate Court Hears Okla. Gay Marriage Case Author Gabriel Garcia Marquez Dead at 87 Chelsea Clinton Is Pregnant Flamingo Frenzy Ahead of Zoo Construction Crew Criticized Over Handling of Ferry Disaster Agreement Reached to Calm Ukraine Tensions Boston Bombing Survivors One Year Later