The False Salvation of Energy Conservation

Right on cue, The Baltimore Sun and The Washington Post are touting Governor O’Malley’s new legislative recommendations and energy policy prescriptions.

From the Sun:

Creating a "strategic energy investment fund" paid for by electricity companies that would invest in energy-efficient technologies and promote nonpolluting power alternatives. Asking lawmakers to pass a bill codifying Maryland's goal of reducing overall electricity consumption by 15 percent by 2015, based on 2007usage.

Requiring the state's utility companies to buy 20 percent of their power from wind, solar or other renewable sources by 2022 - and doubling the penalties for companies that do not…

To reward consumers for reducing their electricity use and investing in energy-efficient technologies, administration officials are proposing an array of incentives and subsidies paid by the energy fund, such as issuing rebates to customers who purchase more efficient appliances.

The fund will not rely on tax revenue. Instead, the governor is banking on proceeds from the auction of so-called pollution credits under an initiative of 10 states to voluntarily reduce carbon dioxide emissions.

Under the Regional Greenhouse Gas Initiative, power plants must keep emissions below a downward-sliding limit, or buy credits from cleaner power plants.Brandon Farris, policy director of the Maryland Energy Administration, said Maryland expects to receive about $100 million a year from the sale of its pollution credits, though the yield won't be known until the first auction this summer. Larsen said the amount could be twice as high.

However, as Delegate Warren Miller accurately noted, the costs for the cap and trade scheme will be passed on to—drum roll please—consumers. Also, renewable energy sources are extremely expensive to produce and unreliable. The cost of procuring energy from those sources would be passed on to the consumer as well. Expanding RPS requirements is a rent seekers dream because it allows wind and solar companies to get from government what they could not obtain on the open market. A case in point is Wayne Rogers owner of wind power company Synergics Wind Energy LLC, and former head of the Maryland Democratic Party. Rogers used his money and influence in the senate to circumvent the PSC in order get wind approval for his wind farm in Garrett County.

Furthermore, even if consumers bought into the conservation campaign and practices, they will not save on their energy bills, because of decoupling. In a nutshell, decoupling is a scheme where utility companies are allowed to charge the same rates even if customers are using less energy. That means no matter how much you conserve you are still paying the same rate as if you were not conserving. See O’Malley Watch’s post on PSC Chairman Steve Larsen’s endorsement of the plan, and my Red Maryland colleague streiff’s explication of the concept (and the left’s misleading use of it) and how it resulted in escalating energy costs in other states.

O'Malley officials acknowledge that power companies probably would pass on to consumers the costs of buying pollution credits, which would in turn drive up electricity bills unless the added costs are offset by reduced usage.

That's why the governor wants to use the fund to make it easier for consumers to lower energy consumption, Abbruzzese said.

But recent tax increases and economic uncertainty might spur a fight in the legislature this session if lawmakers prefer to give all or some of the $100 million back to consumers…

Sen. Thomas M. Middleton, a Southern Maryland Democrat who chairs a committee that handles utility issues, said protecting fixed-income and poor residents would be a high priority. "If we've got $100 million, we've got to take care of those folks," he said.

Johanna Neumann, policy advocate for the Maryland Public Interest Research Group, said she hopes the legislature will resist the temptation to directly refund the sale of pollution credits to consumers.

"I could see the political advantage of rebating the money," she said, "but by actually investing ... in energy efficiencies, consumers will see greater benefits and greater savings, because we will able to avoid blackouts, future rate shocks and avoid costly new transmission lines."

Forget for a moment that Sun reporter Gadi Dechter did not bother to mention that Mary PIRG is a left wing advocacy group, it is telling that Mary PIRG is not interested in the least in directly helping fixed-income and poor residents. Rather they would have us follow the false path of energy conservation, when it clearly does not benefit consumers.

The Post is guilty of this deception as well. At the end of the article reporter Lisa Rein, writes:

State regulators are already reviewing conservation plans submitted by Pepco and Baltimore Gas and Electric. The utilities would be allowed to pass on the costs to consumers, but "the idea is that, eventually, everyone will pay less because of these investments in conservation," [Maryland Energy Administration Director, Malcolm] Woolf said.

So there you have it. A CO2 cap and trade scheme, paid for by added consumer costs, to fund consumer energy-conservation programs, that won’t save money because the PSC allows utility companies to charge the same rates no matter the lower level of consumption.

As a reminder, these policy prescriptions and legislative recommendations are straight out of the interim report from the Maryland Commission on Climate Change (MCCC). The MCCC report is the latest cookie cutter report written by Center for Climate Strategies the technical/policy arm of the Pennsylvania Environmental Council and avowed alarmist advocacy group. CCS has written the same report for both Arizona and North Carolina.

We don’t know the extent of CCS’ control over the process in Maryland because Tad Aburn, an official at MDE is stonewalling PIA requests in order to protect the secrecy of the commission’s deliberations. According to Governor O’Malley and the MCCC, climate change is a dire emergency. Just don’t ask them about it, because as Tad Aburn himself stated, he has no idea how to reach the CO2 reduction targets.

See here, here, here, here, here, here, here, and here for all the sordid details.

Maryland is a net importer of energy. It needs to expand its ability to generate energy. Unfortunately, the General Assembly put a huge obstacle to that during the special session. The Budget Reconciliation Act repealed a state property tax credit for building power plants, and opened the door for counties to levy taxes on energy generators, effectively making it even more expensive to build generating facilities.

Once you get past the alarmist lie that the planet is in crisis, and that carbon dioxide is not a "pollutant," (going by the green definition of pollutant for CO2 then water vapor is a "pollutant" as well) the way forward is to increase the state's generating capacity.

Playing games with conservation and cap and trade schemes does nothing to improve Maryland's ability to generate energy or address future supply and brown-out issues. We need to seriously contemplate more coal and gas fired plants, hydroelectric, and nuclear generation options.

O'Malley's plan is a shell game, with the utility companies and environmental special interests as his accomplices and the consumer/taxpayer as the mark.