By Mitch Kokai

Fans of government spending like to talk about “investments.” When government isn’t spending enough on their preferred programs, it’s failing to make proper investments.

In truth, most government spending has little to do with investment — spending money now with the expectation of later returns. Instead most government spending involves transfers. Government takes money from one group and gives that money to another group — usually taking a cut to fund the bureaucracy that administers the transfer.

All but the most ardent libertarians accept the basic concept of government transfers. Those with means accept the idea that they will surrender some of their income to help those with fewer resources. Within reason, a flow of subsidies from “haves” to “have-nots” raises minimal concern.

But we all should take notice when government reverses the flow of subsidies. When government policies take money out of the hands of those who can least afford to lose it and transfer the money to those at the upper end of the income scale, there’s a clear problem.

Take the case of rooftop solar panels.

The issue attracted attention recently at the North Carolina Court of Appeals. A three-judge appellate panel heard oral arguments on Feb. 7 in a case pitting environmental activist groups against the state Utilities Commission.

Critics dispute the way the commission implemented a 2017 state law. The law, originally known as House Bill 589, called for ending subsidies that forced people without rooftop solar panels to foot some of the bill for those with panels.

The subsidy involved a process known as “net metering.” The Utilities Commission tweaked net metering so that utilities would no longer credit customers a flat rate for all rooftop solar energy sent to the electrical grid. Credits would vary based on factors more closely associated with energy supply and demand.

“Net metering customers have received a cross-subsidy from non-net metering customers until now,” argued attorney Robert Josey, representing the Utilities Commission’s Public Staff. The 2017 law “required the commission to establish net metering rates that avoid cross-subsidization and that hold nonparticipating customers harmless,” he added.

The critics “simply disagree with that state policy that requires net metering customers to pay their full fixed costs to serve,” Josey said.

Matthew Quinn, representing the environmental groups, cited an expert who estimated that average savings for rooftop solar customers could drop as much as 31% under the new system. Installers estimated that the value of rooftop solar systems would drop 20-35%. Even the commission’s public staff found that a rooftop solar customer’s electric bill “will be increased between 16.5% and 118%,” Quinn argued.

Quinn labeled the change a “terrible injury” for the rooftop solar industry. That’s not necessarily a bad thing. To the extent that rooftop solar customers’ previous benefits relied on subsidies from those with no solar panels, then it was an arrangement based on “have-nots” paying for “haves.”

Not every person at the high end of the income scale uses rooftop solar panels. But only those who can afford to have them installed ever enjoy the opportunity to benefit from discounted rates.

Critics contend that the Utilities Commission failed to conduct a proper cost-benefit analysis when creating new rooftop solar rules. They urged Appeals Court judges to factor in social benefits. Quinn also cited Gov. Roy Cooper’s executive orders promoting renewable energy use.

That point of argument prompted a humorous exchange.

“What authority does the Utilities Commission have to consider any executive order from the governor?” Judge Hunter Murphy asked Quinn.

“I don’t know if it’s binding upon the Utilities Commission, but it’s certainly important,” Quinn responded.

“Why? Why is it any more important than my 12-year-old daughter’s opinion?” Murphy shot back.

Murphy’s quip prompted some smirks. It also highlighted a serious issue.

Cooper and others who push for greater reliance on renewable energy sources like to focus on potential benefits. They rarely discuss costs, especially when the conversation turns to North Carolinians who are likely to bear a disproportionate share of the costs.

Whether the specific topic is electric vehicles or rooftop solar panels, only those with the means to make the initial payments can access the benefits. To the extent that customers choose to spend their own money, with the expectation of future savings on fuel or electric bills, they are making investments.

To the extent that government is subsidizing those choices, using resources taken from people who can’t afford EVs or solar panels, the concept of a government transfer plays a much larger role in the transaction. It’s the type of transfer — from have-not to have — that deserves closer scrutiny.

Mitch Kokai is senior political analyst for the John Locke Foundation. This first appeared in the Carolina Journal.