HB 80 Will Increase Energy Costs

Clean energy proponents are attempting to reignite the fire under HB 80, which would increase the amount of electricity utilities must produce from alternative energy sources. In a letter to the Inquirer, PennFuture claims that solar energy is free, while ignoring the cost of intermediate power sources when the sun doesn't shine.

Last week DEP Secretary John Hanger published a laundry list of alternative energy projects as proof that HB 80 would be beneficial, but if people and businesses are already investing in alternative energies, why do we need a mandate to force electric companies to use more alternative power sources?

Here is my response:

Mr. Hanger believes that mandating an increase in the amount of electricity produced from certain alternative energy sources Pennsylvania will attract more private investments and produce green jobs, creating a more competitive energy economy. These claims fail to distinguish between market competition, which responds to consumer demand, and competition for a growing pot of taxpayer funds.

More specifically, it is almost impossible to verify the promise of green jobs because there is no concrete definition of this widely used term. The phrase can be used for any position that is remotely related to alternative energy, including administrators in the DEP itself. In reality, jobs will be destroyed by increasing regulations on disfavored energy sources.

Passing House Bill 80 will cause either a reduction of the current energy supply, given that alternative energy produced only 5.7% of Pennsylvania's power in 2007, or dramatically raise the costs needed to fund new infrastructure and alternative energy sources that are expensive to produce. As a result, energy rates will increase just as consumers are bracing for the expiration of PA's energy rate caps.

The only way to ensure that clean technology is affordable is to keep the market flexible and open to innovation. Propping up the alternative energy industry with a plethora of government handouts and mandates is not sustainable, even if it does provide advantages over traditional energy producers.

Rendell Retreats from Natural Gas Tax

Yesterday, Governor Rendell took another of his proposed taxes off the negotiating table. His announcement perfectly demonstrates the points made in my new commentary on Rendell's mixed energy policy.

Governor Rendell's retreat is a good sign as the budget battle continues, but the his statement, "We should have a severance tax, but not at the beginning" foreshadows a similar showdown next year and implies that industries do not grow when they are taxed . . . interesting observation Governor.

Meanwhile the left wing PennFuture defends the tax saying it will hit big (evil) corporations. But the left-wing Pennsylvania Budget and Policy Center defends the tax saying that it will not hit corporations subject to the 2^nd highest corporate income tax rate in the nation, but mostly small businesses.

In reality the natural gas severance tax would have crippled an emerging industry inhibiting thousands of potential jobs and income for rural families in northern PA.

Cash for Clunkers Crash and Burns

The New York Times reports that car dealers in New York have pulled out of the government's cost-shifting program to aid automakers in Detroit under the banner of environmental awareness. But dealerships are simply unable to pay employees or normal maintenance costs with the majority of their reimbursement requests still unapproved.

One dealership owner explains, “The bottom line is the bad outweighs the good,” Mr. Wondergem said. “I had to make a decision to stop participating because of the stress and the risk. This program has really consumed my life. "

The waits are so widespread that GM is now offering to deposit a temporary infusion of cash in order to shore up dealership's accounts and keep them participating in a program that has allowed the auto maker to raise production.

Meanwhile charities are hurting as vehicle donations suddenly drop, used care dealers are complaining about low inventories, and repair shops worry about the difficulties they will face when looking for spare parts.

Cost of Government Represents 61% of U.S. Income - Higher for Pennsylvania

Americans for Tax Reform has a new report on the Cost of Government, finding that Aug. 12 - day 224 of 2009 - is how long it takes Americans to pay for the cost of Government.  They have an easy to find website at CostofGovernmentDay.com.


This is calculated by federal spending, state and local government spending, and the cost of complying government regulations; dividing by national income (or for state specific results state income); and then coverting to a percentage of the year.

Amazingly, Cost of Government day is 26 days later than last year.  Much of this increase is due to the massive increase in federal spending - driven by bailouts and the "stimulus" - which takes 111 days worth of national income (21 more than last year).  There were also increases in the cost of state and local government spending and regulatory burden (as a percentage of income).

If you didn't have time to plan a party, you are in luck, because Pennsylvania's "Cost of Government Day" isn't until August 14.  Of course, you are also not so lucky, because Pennsylvania has a higher burden than most of the rest of the country, ranking 40th in cost of government.  Unfortunately, Gov. Rendell thinks that the cost of Pennsylvania government is too low.

The Cost of Government Report also includes informative sections on government employees, interstate migration, TARP, the stimulus, Cap & Trade, and more.

Rendell Declares Autism Mandate a Failure

In 2008, the Pennsylvania General Assembly passed, and Gov. Rendell signed, a new mandate that private insurers would have to cover autism services. At the time, we said the new mandate would drive up insurance premiums, should be offered as an optional rider, and suggested vouchers for autistic children instead.

Gov. Rendell, however, suggested the mandate would actually save taxpayers, saying in his signing statement,

"By requiring private health insurers to shoulder their fair share of the cost of treatment, we’re taking steps to address the gap in the private insurance market and reduce reliance on government programs as the primary source of services and funding.” [emphasis added].

But now Rendell is saying we have to increase, not reduce state spending on autism services. He blasts the Senate Republicans for proposing to spend "only" $14.8 million on the line-item. In reality, the Senate budget would spend $19.1 million - using federal stimulus funds to supplement state funds - but don't expect Gov. Rendell to give the straight facts.

That total actual represents about the same as 2008-09 spending (after Rendell's freeze, which reduced the autism line item by $3.7 million, and later revision to the actual spending), and a whopping $9.2 million increase (92%) over 2007-08, when Rendell signed the autism mandate.

I guess it is pretty fair to say that if a 92% increase in autism spending in two years isn't enough, then we have not "reduced reliance on government programs"

Make Drill Here, Drill Now a Reality

Remember Drill Here Drill Now campaign? It's one approval away from becoming a reality.

As of October 1, 2008 no moratoriums exist on offshore oil and gas development, however, no new areas may be leased or developed unless they are included in a 5 Year Program. The Minerals Management Service is in charge of developing this five year plan and their 2010-2015 proposal includes leasing in the Atlantic and expanded leasing in the Gulf of Mexico, the Pacific, and Alaska. But the plan still has to be approved.

The Consumer Eneregy Alliance is asking for your help to make sure this plan passes. They are collecting thousands of comments from the citizens of PA and letters from both elected officials and business leaders until September 21, 2009. (this is when the comment period closes)

You can support the expansion of offshore drilling here. And if you'd like to help CEA collect comments at events around the state click here.

Federal Government, M.D.

President Obama's $1.5 trillion health care plan would make health insurance a "right" for all Americans. The proposed plan empowers the federal government to ensure that employers provide insurance and that individuals obtain it.

Companies that do not provide access to coverage would face stiff penalties, and individuals who refuse to get insurance (that they may not want) would also be forced to forfeit about 2.5 percent of their salary in penalties.

Here's a rough sketch of how this wonderful plan would work. It's too bad - forced health insurance would make a favorite saying obsolete: "an apple a day keeps the doctor away."

Stop the PA Rip-off: End Rate Caps

Democratic candidate for Governor Tom Knox just launched a website to promote the extension of electric rate caps. The site, stoptheparipoff.com, ignores the cost of extending rate caps and is full of misleading stats. For example, Knox's site claims, "Experts predict deregulation will increase electricity rates up to 65%, with consumer advocates arguing the increase will be closer to 100%."

In reality, PPL customers will see a 30.4% increase according to the utility and PUC estimates after rates capes expire (which is only slightly higher than the price before rate caps, adjusted for inflation). And PECO customers in Philadelphia could see a decrease in electric rates if current market trends continue.

Knox's Recommendations:

• Extend caps electric rates increase for 3 years, limiting increases to the cost of inflation plus 1.5%. [This would continue to stunt competition and push inevitable rate hikes further down the road. In the long-term phase-in plans do little to mitigate the cost to consumers, and could produce legal action from utilities who have made critical decisions based on the current timeline.]
• Create a state Power Purchase Authority that will obtain electric generation for all residential customers, leveraging the state’s significant buying power for lower rates and pass the cost savings onto customers. [Businesses are already pooling their buying power to obtain more reasonable rates, why get the government invovled?]
  

Tony Phyrillas has his take here.

EPA Internal Report Skeptical of ‘Global Warming’

The Competitive Enterprise Institute has revealed private emails they had obtained from the EPA skeptical of the science behind the global warming phenomena. In the emails, Alan Carlin and John Davidson, two researchers with the agency, express their discontent, citing a need for more independent scientific research on exactly how much of the climate change is attributed to humans. This skepticism is simply the latest in quickly-growing population of scientists and weather experts concerned over the lack of concrete data pointing to human influence over the climate.

In January, Weather Channel founder Jim Coleman, wrote a scathing commentary calling the global warming movement “bad science” and a “hijacking of public policy”. We see the epitome of policy hijacking in H.R. 2454, the cap and trade bill that recently passed the House by a razor-thin margin. Should the taxpayers really be responsible for up to $3,900 in tax increases if even the EPA is questioning the science?

More Mandates=More Expensive Electricity

On Wednesday the Housed passed a bill to reestablish the State Energy Office, terminated in 1995. HB 287 would resurrect the office to preform vague duties like:

• Promote development of the state's natural and renewable energy resources.
• Be in charge of energy policy development and implementation and heating assistance.
• Monitor energy prices and supplies and develop responses to emergencies.
• Encourage the development of a strategic heating oil and diesel fuel reserve in the mid-Atlantic region to counter price spikes and fuel shortages.
  

Since 1996, the year after the office was terminated, wholesale electricity prices have dropped 23% when controlling for the increased cost of natural resources. Looks like the energy supply and prices are doing just fine without the SEO. If the government wants to promote the state's renewable energy resources they should refrain from placing more standards and regulations on energy companies . . . which leads me to my next point.

HB 80, recommitted to appropriations this week, extends the 2004 Alternative Energy Portfolio Standards and requires the capture and sequestration of carbon, and ultimately a carbon sequestration network in Pennsylvania. The bill increases the amount of expensive solar energy electricity companies must utilize from 8% to 20%. Currently the commonwealth derives less than 1% of its energy from solar power. This isn't just a question of cost, it's an issue of reliability.

Just what we need when the federal government is very close to passing energy regulations that could void AEPS.

Frankly, I don't understand how legislators can claim to be so concerned about the rising cost of electricity and the expiration of rate caps, while simultaneously supporting further regulations to increase the price of electricity.

PUC Commissioners Oppose Cap and Trade

The Vice Chairman and two other Commissioners of the Pennsylvania Utility Commission sent a letter to the PA Congressional Delegation in opposition to proposed cap and trade legislation.  

Their critique is that "this policy will have a profound adverse impact on the Commonwealth of Pennsylvania", especially given that Pennsylvania is a large coal-producing state. 

Like Obama, they believe Cap and Trade will necessarily increase electricity rates.  

The cost estimates are staggering ... By 2013, this would result in an annual PJB-wide market impact of nearly $36 billion in higher energy prices and rate increases of over $400 annually for resident ratepayers.

Trying to Fight Unfunded Mandates? Go Directly to Jail.

Township Supervisors in Cromwell Township (Huntington County) are fighting a mandate from the Pennsylvania Department of Environmental Protection to install a public sewer system.  The supervisors claim such a system will cost their constituents too much (at least $70 per month), and most residents have no need for it.

As a reward for fighting to save taxpayers money, all three supervisors will be sent to jail, for a minimum three month sentence.

Click here for the story and video.

What Cap and Trade Will Cost

A Heritage Foundation analysis finds that proposed "Cap and Trade" legislation will cost the average American family $3,900 per year.

The chart to the left compares the cost of this legislation to other household expenditures.

President Obama, one would expect, would characterize the costs of his plan more optimistically ... or maybe not. As he said, “Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.”

Allegheny Power Looks to Keep Prices Down

Pittsburgh Tribune Review has a story on Allegheny Power buying additional electric power cheaply on the wholesale market, while prices are low. 

This is one aspect of the issue of expiring rate caps that many lawmakers miss - the fears of dramatically higher electricity prices occurred at a time when energy prices (which are the cost drivers) were especially high. The latest estimates of rate increases are significantly less dramatic.   Of course, in the case of PPL, they have already purchased much of the power for 2010 (their rate caps expire in 2009) and is suggesting a 30% rate increase.

Some other things for lawmakers at the state and federal level to consider is that  mandates for utlities to use more "alternative energy" is also a call for higher electricity prices, while expanding production - such as getting more natural gas from the Marcellus Shale formation - would likely reduce energy costs.  And if Obama's "cap and trade" proposal were to be enacted, in his own words, "electricity rates would necessarily skyrocket.”

PA Liquor Stores Want a Better Monopoly

Brian O’Neill with the Pittsburgh Post-Gazette reported yesterday that the PA Liquor Control Board (PLCB) has spent $3.7 million to develop a new name for their stores in an attempt to attract more customers. Apparently, “Wines & Spirits” is far too appropriate and not misleading enough for Joe Conti, chief executive officer of the PLCB who has compared the rebranding to the Pennsylvania State Lottery’s cute and cuddly mascot, Gus.

When private companies use cute animals on potentially hazardous products (remember Camel cigarettes?), they’re obviously trying to encourage a younger audience. However, when a state monopoly does the same thing, it’s simply an attempt to “maximize our returns for the people of Pennsylvania.”

O’Neill doesn’t state the obvious wasteful spending involved here, but he does point out, “[Conti]'s starting with 100 percent market share and is guaranteed the same share at the end…I'm guessing you could call one "Head Lice," another "IRS" and yet another "Cleveland Browns" and they'd still do well.”

While “Cleveland Browns” is a bit of a stretch, the point made is clear. The government hates having the (accurate) perception of a state monopoly while continuing to ignore the public benefits from private liquor.

Click here for a related post on Sen. Rob Wonderling’s push to privatize the industry.

Big Government, Big Corruption

Dan Mitchell from the Center for Freedom and Prosperity links the connection between government growth and corruption in this clip. He notes that rather than promoting honest dealings, government intervention and regulation actually encourage corrupt behavior.

Pennsylvania Pie Fight

Wall Street Journal picks up on the fight over government regulation of homemade pies at church bake sales in Pennsylvania.

My favorite part of the story is this:

Thanks to the publicity caused by the crackdown, the St. Cecilia's fish fries attracted more visitors than ever before. The church has cleared about $3,500 on each fry, according to Father Michael Greb, pastor of the church, who notes that regular donations are down about 10%. The fish fries are the church's biggest fund-raiser of the year.

If you are looking for some dinner tonight, here is St. Cecilia's fish fry menu

State Regulation of Bake Sales Goes Too Far

Hat Tip to Tom Shaheen of the PA Family Institute for this story of the weird/big government.  It turns out that the Pennsylvania Department of Agriculture has been cracking down on church bake sales, because some of the ladies were selling - get this - homemade pies.  The horror!

It turns out, only goods baked in kitchens licensed by the state are fit to eat, because we all know that we can trust our government to ensure good pies, right?  Freshman Sen. Elder Vogel thinks government has gone a step too far in this case. 

Welcome to Harrisburg, Senator.

PA Judge Overturns State Mercury Rule

A Pennsylvania judge ruled that a state-specific regulation on mercury emissions (one that was put into place by the Department of Environmental Protection over the objections of many lawmakers)--which was far more draconian than federal EPA regulation--was unlawful, invalid, and unenforceable.

Should the ruling hold up, it represents a major victory for electricity generators - as well as for consumers, who would have paid millions in higher rates under the new regulation. Companies would merely pass on their costs to consumers (at the same time rate caps will be expiring).

Downsize the Federal Government

Cato Institute video on "Downsizing the Federal Government" starting with the US Department of Agriculture.

If, like me, you thought that the Dept. of Agriculture was a relatively small federal agency (compared to say, Defense or Social Security spending), consider that it encompasses 100,000 employees, a budget of $95 billion, 7,000 offices, 200 subsidy programs, 1,800 pages of laws, and 10,000 pages of regulations.