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This does not compute



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Gov. Edward Rendell of PA is indignant because GOP legislators are calling his proposed “system benefits charge” or “fee” on electricity a TAX. The proposed “fee” would place a $0.0005 surcharge on electricity rates. The proceeds would create an $850 million “Energy Independence Fund” to invest in conservation, energy efficiency, and renewable energy. Rendell predicts the Fund would save Pennsylvanians $1 billion a year over ten years.

This smells fishy. First of all, the very title of the fund is false advertising. “Energy independence” is a dumb idea even when applied to the transportation fuels sector, but has little if any intelligible meaning when applied to the electric power sector.

Explanation: If we had to get all of our gasoline from domestic sources, we’d probably be paying $10 a gallon at the pump. If we replaced all imported petroleum with ethanol, most of the country would have to be planted with corn–the impacts on wildlife habitat and food prices would be devastating. Yes, America uses natural gas to generate electricity, and natural gas imports are rising. However, the Energy Information Administration projects a long-term decline in natural gas’s share of electricity generation, from 19% in 2005 down to 16% by 2030. In contrast, EIA projects coal’s share to go from 50% in 2005 up to 57% in 2030. The coal comes–and will continue to come–from domestic mines, America being the Saudi Arabia of coal.

More importantly, the economics of the Gov.’s proposal do not compute. If an “investment” of $850 million can produce returns of $1 billion a year over ten years, why is there any need for a “system benefits charge,” “fee,” or tax?

Why not just tell PA’s utilities to eat the $850 million and let them keep a bigger slice of the projected $10 billion savings? Alternatively, why not just ask the legislature to reprogram $850 million of the State’s existing budget, to be paid back with interest out of that $10 billion bonanza over the next decade?

But, no, Gov. Rendell wants ratepayers to absorb all the risk if the Energy Independence Fund doesn’t deliver billions in savings as promised. Additional confirmation–as if any were needed–that global warming policy is all about transferring wealth from the unorganized many to the organized few.


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