Story by Ari Sen
Ninth District residents may have seen two ads recently attacking Democratic candidate Dan McCready on his energy and business record. But the article underlying the attacks contains several misleading or outright false statements.
The two ads – titled “Costly,” funded by the conservative Club for Growth Action PAC, and “Greedy McCready Gamed The System,” funded by the Congressional Leadership Fund Super PAC, which is dedicated to electing Republicans to Congress – both cite a July 3 Washington Examiner article.
We are here to break down some of the claims from the piece to separate fact from fiction.
“[McCready] served on the board of directors for the North Carolina Sustainable Energy Association from January 2015 to December 2017.”
This is correct. McCready is listed on the 2015 and 2016 annual reports as a member of NCSEA’s board. The 2017 report doesn’t list any board members.
“[McCready] has also been in talks with Senate Majority Leader Chuck Schumer about a potential 2020 Senate bid.”
In a press conference with reporters shortly after rolling out his prescription drug plan, McCready said he met with Schumer, but he wasn’t planning on running for the Senate.
“I did meet with him, but I’ve also been very clear that I’m not running for the Senate,” McCready said. “I’m running for the 9th Congressional District to serve people here, and I have been for 25 months.”
“During McCready’s time on the board, the nonprofit spent over $450,000 on state lobbying and its affiliated trade association, the North Carolina Clean Energy Business Alliance, contributed more than $125,000 to state candidates, according to North Carolina election and lobbying records.”
Not quite. Principal expense reports for NCSEA show the organization spent $156,116 in 2015, $138, 297.08 in 2016 and $124,634.30 in 2017 for a total of $419,047.38. A search of the FEC database returned no results for the North Carolina Sustainable Energy Association or the North Carolina Clean Energy Business Alliance.
“In 2015, while McCready was on the board, the organization lobbied heavily against a bill that would have revised the North Carolina Renewable Energy and Energy Efficiency Portfolio Standard, a 2007 policy that requires private utility companies to supply 12.5% of electricity services from renewable or efficient energy sources by 2021.”
“Under the 2007 policy, utility companies were permitted to pass on the additional costs of using renewable energy sources to consumers by as much as $34 per household, $150 per commercial customer, and $1,000 per industrial customer per year by 2021.”
“The revised bill, which McCready’s nonprofit group opposed, would have frozen the state’s renewable energy mandate at 6% for utility companies, and capped consumer fees at $12 per year going forward.”
The figures cited for the 2007 policy are correct. However, state records do not show which legislators were lobbied or for which bill they were lobbied. A press release from the organization said it did not support the bill and called it “a threat to the clean energy economy in North Carolina.” The release also said NCSEA remained cautiously optimistic if it was implemented.
“NCSEA does not support the freeze of the (the 2007 policy) in H760, and does not believe it was necessary to accomplish the goals of clean energy opponents,” the release states. “However, if the bill eventually becomes law, we are cautiously optimistic that this could be an opportunity to ensure that renewable energy and energy efficiency have ample opportunity to compete in North Carolina’s highly regulated, monopoly-controlled market moving forward.”
“A 2017 study by the Institute of Political Economy at the University of Utah found that the 2007 North Carolina policy would eventually ‘raise electricity prices significantly across all sectors, with the brunt of the costs falling upon the commercial sector.’”
Several parts of this statement are misleading or false. The study referenced actually comes from Utah State University and Strata Policy – not the University of Utah. Additionally, the study was written in 2015 and revised in 2017.
In an article responding to the ad, Think Progress questioned the political motivations of the authors.
“The Examiner story cites a 2017 study that estimated that if rates rose 2.2% for residential customers due to an increased renewable energy standard, that would be the annual result,” the article said. “The study was done by professors at a Koch-funded Utah State University think tank and it’s off-campus Strata Policy.”
Think Progress, a more liberal publication, is correct that Strata, Utah State and several of the studies’ authors have ties to conservative and fossil fuel interests, including the Koch family. Charles Koch is the CEO of Koch Industries, which holds subsidiaries tied to the petroleum industry. He and his brother, David, are well-known conservative philanthropists.
According to an analysis of the Koch Foundation’s IRS 990 forms by SourceWatch, Utah State received more than $1.5 million from the Koch family in 2017 and $288,000 in 2016.
(UNC-Chapel Hill has also received several donations from the Kochs. UNC FactCheck is funded privately.)
Strata says on its website it “is devoted to talent development by creating curriculum and programs that offer real mentorship in the principles of liberty and free markets.” It goes on to cite several libertarian and conservative economists, including Adam Smith, Friedrich Hayek and Milton Friedman.
One of the studies authors, Randy Simmons, previously served as the Charles G. Koch Professor of Political Economy. Simmons is also a senior fellow at the Property and Environment Research Center, which has received funding from the Kochs and ExxonMobil. Simmons’ LinkedIn page also lists him as the president and director of research for strata.
Two of the studies other authors, Kenneth Sim and Ryan Yonk, are now listed as employees of the Independent Institute, an Oakland-based think tank. Though the organization bills itself as non-partisan, it generally offers analysis from libertarian-leaning views and lists endorsements from several prominent libertarian thinkers, including Rand Paul and his father Ron Paul, Ronald Reagan and Milton Friedman. The organization has also published work from climate change skeptics, including research fellow S. Fred Singer.
The Beacon Hill Institute, a free-market think tank, also contributed analysis to the report. Beacon Hill, which was associated with Suffolk University until December 2016, has also been criticized for publishing material skeptical of the human causes of climate change. Suffolk has received several donations from the Koch Foundation, most recently a $5,000 donation in 2015.
“It also determined that there were ‘significant harmful effects on the economies of all states’ that instituted such policies, including a 4% decline in personal income at an average loss of $3,479 per family, a 2.52% decline in the nonfarm employment rate, and a 7.85% increase in the state’s unemployment rate amounting to 32,239 lost jobs.”
It is important to note that this statement refers to all states with similar policies, not to North Carolina specifically.
The Beacon Hill analysis in the report of North Carolina’s policy only consists of information from 2010 through 2014. For the years studied, the report says most of the costs were paid by industrial customers, not residents.
“The costs are concentrated on the industrial customer,” the report states. “For example, in 2013, industrial customers paid $38.8 million for (cost recovery), or $390 per customer, while residential customers paid $19.6 million, or $4.62 per customer.”
To estimate beyond 2014, Beacon Hill developed two scenarios: one where the cost rider was capped and one where it was allowed to continue under the regulations set out in the 2007 bill. Though these scenarios rely on assumptions, they speculate that most of the costs will be absorbed by commercial clients, not residents.
“In each situation, the commercial electricity customer bears the brunt of the (2007 policy’s) costs and increase in electricity price increases, posing potential threat to the competitiveness of North Carolina’s commercial business base.”
But figures reported to the North Carolina Utilities Commission have shown that energy companies have asked for far less than the maximum cost recovery rate. According to a 2018 report, Duke Progress only asked for $0.55 per month for residential customers and $58.71 per month for industrial customers to offset the costs of the 2007 policy. Duke Carolinas asked for even less – $0.07 per month for residential customers and $6.44 per month for industrial customers.
A Duke Energy report claims the energy provider owns and operates more than 35 solar facilities across the state, serving more than 8,000 customers with the capacity to serve up to half a million.
The Examiner article also makes no reference to other studies, which have shown conflicting results when it comes to costs.
A study by the conservative Civitas Institute estimated value-added reductions between $3.9 billion in 2016 to more than $6.6 billion in 2025. Another ongoing report from the University of Chicago researchers found that similar policies could raise average retail electricity prices by between 11 and 17 percent.
But other studies have drawn the opposite conclusion, saying the 2007 policy could save consumers money. A 2013 study commissioned by the NCSEA – and conducted by RTI International and La Capra Associates – found monthly estimated savings of $0.50 in 2012 and $1 by 2024.
