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3/5/2010
Scaled back WI Global Warming Bill should be a killed bill

Rep. Phil Montgomery (R-Green Bay) poses the question – what does a “scaled-back” energy bill look like?

From Governor Doyle on down, legislative Democrats all agree the legislation needs to be scaled backed. This begs the question of what constitutes a scaled down version of the Governor Doyle’s Global Warming legislation. No one really knows the answer to that question, but one thing is quite clear – Governor Doyle’s priority is the new state government mandate requiring 25% of Wisconsin’s energy to come from renewable resources by 2025.

Unfortunately, this is the single most expensive job-killing mandate in the entire bill….

One source tells me there’s “lots of discomfort in both houses” with the identical bills, AB 649 and SB 450. Committees of both houses have taken extensive testimony on the bills. At this juncture, it’s hard to tell who – if anyone – is controlling or directing the progress of this great big 174 page grand energy bill; the sense is “everyone is flying by the seat of their pants.”

And it’s no wonder, I suppose. You’ll find hundreds of policy moving parts in these bills – and hundreds of political moving parts in these bills.

And talk about flying by the seat of one’s pants – there’s a huge debate as to the cost of the "25 x 25" monstrosity. Testimony before the Senate Select Committee on Clean Energy by the Wisconsin Paper Council, NewPage (pp. 31-41 of the .pdf) and Wisconsin Manufacturers and Commerce (WMC) (pp. 55 – 63 of the .pdf) use a number between $15 billion and $16 billion. (Just as a side note – NewPage’s testimony mentions that the electric bill for their Central Wisconsin mills exceeds $6 million – a month! Do you think they – and we – should care about the price of electricity in 2025?)

The Guv’s policy team (pp. 11 – 23 of the .pdf) concentrated on jobs created (which WMC disputes, claiming 43,000 jobs lost).

The modeling shows that thousands of new jobs will be created as a result of the Clean Energy Jobs Act. Specifically, the results indicate that the legislation will create a minimum of 15,000 new jobs for Wisconsin by 2025, and more than 1,800 of those jobs will be realized in the first year of enactment.

And it goes on for 13 pages about this jobs business!

Ok, so given the extensive controversies, what does “scaled down” mean?

One option would certainly be to kill the thing, allow it to die a not-so-slow death, given that the legislative session ends in a few weeks.

I understand a bare-bones option would be to nix everything in the bill except this 25% renewable energy business. But unlike the current bill, amendments would identify additional energy sources that qualify as “renewable” – such as hydro-generated energy, steam captured for electricity in manufacturing processes, captured energy efficiencies and possibly even nuclear power.

Portions of testimony from the Wisconsin Paper Council provide the arguments, for me, to kill the thing.

It is hard to imagine how this level of cost increase… could be offset by energy conservation…. It is also hard to imagine how this level of cost increase would not have an adverse impact on the paper industry, perhaps a significant adverse impact. One of the shortcomings of the bill is that there is no process for considering the costs and benefits. [Emphasis is mine.]

What??? Oh my.

Jo Egelhoff, FoxPolitics.net

COMMENTS

We already have an RPS this would just increase it. Remember too there are benefits as well as costs.

"On March 17, 2006, Governor Jim Doyle signed Senate Bill 459, the Energy Efficiency and Renewables Act, which increased the state’s previous renewable portfolio standard. The revised standard requires utilities to produce 10 percent of their electricity from renewable energy sources by 2015. Sources of energy that count toward the standard include solar, wind, water power, biomass, geothermal technology, tidal or wave action, and fuel cell technology that uses qualified renewable fuels."

Dean Weichmann (Fri Mar 05 08:03:43 2010)

Yup, and it's abhorrently expensive. Here's Tom Scharff, Director of Energy Services for NewPage (the guys with the $6 million monthly electric bill, remember?), in his testimony before the Senate committee:
We have already experienced a 70% increase in electricity costs and the state is not even at the 10% target yet.... How much of an increase in electricity costs will I see if the utilities are required to get to 25%? I can't answer that because I don't know. Why? Because a cost/benefit analysis was never conducted on this recommendation by the task force.

However, economists at the Boston based Beacon Hill Institute have and the number they have provided says for Wisconsin to get to a 25% RPS level, electric customers would see an increase in rates of $16.2 Billion.... Once again, if Wisconsin imposes additional costs that other states do not, we would be forced to move paper orders away from Wisconsin to one of the other 5 states or to Canada where we operate! This woud be at the expense of jobs and possibly additional mills being shutdown.

NewPage consumes about 3% of all energy in the state so to do a high level estimate of what impact this could have on NewPage Wisconsin operations, when asked, I would have to tell my company's senior leadership that a 25% RPS could potentially cost us 3% of $15 or $16 billion dollars.

Jo (Fri Mar 05 09:01:09 2010)

Jo:
Instead of passing this bill which would mean significant increases in our energy costs, the legislature should look at repealing the ban on nuclear facilities which leave no carbon footprint.
The federal government and the Obama administation have finally starting talking about this very viable option in the last month and Wisconsin should follow suit. It is proven technology that can be connected to the grid and not have to be subsidized like the other renewable sources.
The current "cap and trade" Wisconsin bill would push more businesses out of Wisconsin. Let's see if our legislators address the nuclear option or continue down the path of significant increased energy costs for business and then wonder why they elect to move rather than comply.
Mike

Mike Thomas (Fri Mar 05 09:26:17 2010)

My god, New Page uses 3%!! No wonder they might oppose anything that might increase rates. So, what rate do they pay now and what might they pay after? Just throwing out big numbers really does not show what the significance of the change might be. I pay 12 cents a kilowatt hour. Bet they pay a lot less. How much will it affect their product cost and competitiveness?

Dean Weichmann (Fri Mar 05 09:36:11 2010)

By the way Tom Scharff does not tell the whole story;
"We have already experienced a 70% increase in electricity costs and the state is not even at the 10% target yet.... How much of an increase in electricity costs will I see if the utilities are required to get to 25%? I can't answer that because I don't know. Why? Because a cost/benefit analysis was never conducted on this recommendation by the task force."

As to the increase in costs for energy, he seems to be attributing that to the RPS. Well guess what, those increases came about due to fuel cost increases. Wind power uses no fuel, the cost is capital cost. Those capital costs will not increase with time like fuel will.
I am sure that they could estimate a cost/benefit anlysis if they were really concerned and share it with the rest of us.

Dean Weichmann (Fri Mar 05 09:53:18 2010)

"There is no process for considering the costs and benefits"

This is not by accident.

"The Task Force also was not asked to evaluate whether the costs of addressing climate change will be greater or less than the benefits achieved. Many members of the Task Force believe that the costs of not addressing climate change substantially outweigh the costs of reducing GHG emissions. Several members of the Task Force disagree or would proceed on a slower track. Under Executive Order 191, the Task Force is not charged with resolving this debate".

The whole report from which this quote was taken is worth reading.
http://wispolitics.com/index.iml?Article=184770

David Martin (Fri Mar 05 14:37:41 2010)

A feed-in-tariff is the best way to create and build the renewable energy economy. Feed-in-tariff laws do three very important things:

1. Allow essentially anyone to get into the power generation business: homeowners, small businesses, farmers, co-ops, local governments.

2. Guarantee connection to the grid.

3. Pay a stable price to the producer that covers the startup costs plus a reasonable profit for an extended contract period of, for example, 20 years. This is necessary to avoid financial uncertainty due to electricity price fluctuation and is the same kind of deal the utilities get now when they build coal plants.

Feed-in-tariffs pay more per kilowatt hour than the utilities get to produce power from existing subsidized coal or nuclear plants, but prices are expected to fall over time as the renewable energy industry grows and matures.

yram (Fri Mar 05 18:31:48 2010)

Dennis, you have to consider the energy that went INTO building the wind mill, before you get any NET energy. These things make flying bats EXPLODE, so no wonder the folks in Calumet County don't like them and complain re. the low-level vibrations.

Plus they kill a LOT of night-flying birds beside the bats. My daughter knows someone who did research on this; unfortunately, the WIND COMPANY paid for it, so you know the results will never see the light of day, as it makes them look bad.

emily matthews (Fri Mar 05 18:38:49 2010)

There are fundamental reasons to oppose this, not the least of which the bill is a fraud based on a fraud. The fraud in the bill is that taking money from enterprises that are profitable and giving it to those who can not survive without subsidies, will on net, create jobs. Historically, at least 2 jobs will be destroyed for every one "created."

And the fraud that this one is based upon is that of anthropogenic global warming. Too many books have been cooked, data altered or lost, for the "science" to remain credible. Even without the CRU emails, the case for AGW is flawed, tainted with fraud. All those emails do is prove devious, if not criminal intent.

Ken Van Doren (Fri Mar 05 18:47:54 2010)

Emily, wind energy is far more positive on a energy basis even considering the cost of building them. As far as bats go there is a fix for that problem, the cut in speed just needs to be raised a little. Bats don't like flying in higher winds.

Dean Weichmann (Fri Mar 05 19:03:35 2010)

"Historically, at least 2 jobs will be destroyed for every one "created." "

Care to back up that statement?
What of jobs like roadbuilding, police, firefighters? For that matter suggest a few jobs that are not subsudized in some manner. Trucking might not do well without roads paid for by taxes.

Dean Weichmann (Fri Mar 05 19:10:04 2010)

Dean, read Tom Scharff's testimony (pp. 38 - 41 of the .pdf) linked in my blog. He addresses your questions.

Jo (Fri mar 05 20:30:15 2010)

Thank you Jo, I will read it soon.

In the meantime I suggest you read an opinion by Robert Pollin concerning the threat of inflation and unemployment.

18 Million Jobs by 2012
http://live.thenation.com/doc/20100308/pollin

Dean Weichmann (Sat Mar 06 02:43:26 2010)

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