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Monday, July 23, 2007

Funding for Governor Rendell's Energy Plan voted down

I was present when Governor Ed Rendell presented his ambitious energy independence plan to the Pittsburgh region this past February, a plan I thought had a lot potential to transform the commonwealth of Pennsylvania from one of the biggest polluters to one of the biggest proponents of clean tech. The plan would have made more venture funding available for PA based clean tech companies and firms investing in clean tech startups, in addition to incentives for residential and solar installations. In addition to the obvious economic gains, consumers would supposedly save up to $10 billion in energy costs over the next 10 years, all this, Rendell said, for the cost of "half a cup of coffee per month." Well, not a cup of joe at Starbucks, but you get his point.

Unfortunately, it seems that partisan politics and corporate interests, once again, stood in the way of a good plan being enacted. As part of this $850 million proposal the average residential customer would see a hike of 45 cents in their monthly electricity bill, or about $5.50 over a full year. I know tax is an evil word, especially among the Pubs, but this is one tax that makes sense, to me at least. If it is a tax that saves you many times that much over the long run, how can it be bad? This plan not only brings jobs to PA, but it will help reduce the dependence on oil and will help improve air quality while reducing the state of Pennsylvania's green house gas emissions, which currently stand at an astounding 1% of world wide total.

While this bill will be revisited this fall with a proposal that does not require a tax on consumers, it makes little sense to delay the passage of the energy plan over a 45 cents a month, especially when our state is in a race against other states to bring these companies and jobs here rather than California, Portland, Austin, and other regions much more greener than ours.

Here are some of the facts:

Questions, answers on energy plan

By Jeff Gelles
Philadelphia Inquirer Staff Writer
Gov. Rendell has been refusing to agree to a 2008 budget until the General Assembly passes his Energy Independence Strategy, which he says would save Pennsylvanians $1 billion a year in energy costs. Here are answers to some key questions:

Why the fight? Much of it centers on Rendell's proposal to surcharge electric bills by one-twentieth of a cent per kilowatt-hour to create an $850 million fund for investment in conservation and in renewable and alternative energy.

What would that cost me? Not much, the governor says. For an average residential customer, it would add about $5.40 to the annual electricity bill, or 45 cents per month - less than half of 1 percent of the average electric bill. The largest businesses would have their surcharge capped at $10,000 a year.

So some businesses would pay thousands of dollars more? Only businesses that already pay hundreds of thousands of dollars for their power. The fee would add about three-quarters of 1 percent to the average industrial electric bills, and about six-tenths of 1 percent to commercial bills. A company that pays 9 cents per kilowatt-hour would pay an extra $1,000 if its annual power cost already topped $180,000 a year.

Who's fighting the plan? Power companies are particularly unhappy with provisions that would favor conservation over building new power plants and govern how utilities serve customers who do not shop for electricity after decade-old price caps expire. Some House and Senate Republicans are fighting the surcharge as a new tax, to which they say they are opposed on principle.

Why are power companies opposed? The industry says Rendell is trying to pick winners and losers in the energy market, especially by favoring renewable energy. "How do we know that we're not building in a preference for a less reliable, higher-priced power supply? The wind does not always blow," says Doug Biden of the Electric Power Generation Association.

How would Pennsylvanians save $1 billion a year? Some would be paid back directly. The plan earmarks $100 million for $100 rebates to consumers who replace older refrigerators and air conditioners with energy-efficient Energy Star models. Beyond the rebate, those appliances can save buyers hundreds of dollars in electricity costs over a five-year period - sometimes even in a single year. (For a calculator, go to www.energystar.gov.)

Where does conservation fit in? That's where three-quarters of the projected $1 billion a year in savings come from - in reduced expenses for electricity paid by businesses. State officials say that by reducing electricity use 5 percent, commercial and industrial customers would save $1.9 billion a year in electricity costs, in return for investing $400 million to $800 million in energy efficiencies, such as fluourescent lighting and window and roof coatings.

Could that $1 billion in savings be exaggerated? Possibly, because there is not a straight line from the fund's investments and individual company decisions. But Pennsylvanians spent about $12.6 billion last year for electricity, so cutting back just 8 percent would save $1 billion. Rendell calls $750 million a year in net savings for business a conservative estimate.

If investing $850 million can net $1 billion in savings, why aren't power companies doing it? Because much of that savings would come from money that Pennsylvania consumers, businesses and institutions would not pay to power companies.

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