Looking at a windmill as I was driving along I-80 yesterday, I was momentarily charmed at the prospect of “clean” and “free” energy. Then I was brought back to reality by remembering our recent report, which was noticed by Midwest Energy News.

An article by Dan Haugen, “Are renewable standards driving up utility rates?,” says, well yes, but not really. And besides, it’s such a complicated mess, who can say? “The Minnkota case illustrates just how complicated it can be to calculate the impact of state renewable mandates on electricity rates.”

Complicated, perhaps. But if a company buys energy from wind not because it wants to but because it’s required to do so by law, it’s certain that the electricity will be more expensive than it would otherwise be.

After mentioning some studies that show renewable portfolio standards have a minimal impact on electricity costs, Haugen adds, “The Minnesota Free Market Institute and American Tradition Institute reached a very different conclusion in an April 2011 report (PDF), which claims Minnesota’s renewable electricity standard is going to cause rates in the state to skyrocket by as much as 37 percent by 2025.”

Haugen’s article contains this interesting nugget as well: “Xcel says adding renewable energy sources to its system has reduced its environmental regulatory risk.” Remember that Xcel faces an even higher requirement for wind power than other utilities in the state.

So do I have this right? It’s good for government to impose regulation Z on a utility company (and by extension, its customers) because it reduces the uncertainty that exists by the existence of regulations A, B, C, D, and so forth.

Sounds like a joke from the dot-bomb era: “Yes, we’re losing money on each transaction, but we’re making up for it on volume.”