RGGI: Its Alive!

UPDATE: As I was writing this, a source informed me, and WBAL is reporting that the Senate will now reconsider SB 268. The new breakdown of RGGI proceed allocations are:

17% instead of 7% to electric universal service program fund23% instead of 35% to rate relief/offset surcharges imposed by utility companies

46% instead of 50% energy efficiency/conservation10.5% instead of 11% for climate change/outreach

3.5% instead of 4% for MEA, also capped at $5 million

Keep an eye on the 11 Democrats who voted against SB 268 yesterday: Jim Brochin; Joan Carter Conway; James "Ed" DeGrange; George Della; Lisa Gladden; David Harrington; Verna Jones; Nathaniel McFadden; C. Anthony Muse; Norman Stone and Bobby Zirkin. I would love to know what the administration promised to any senators that flip.


Yesterday the Senate voted down, 25-21, O’Malley’s RGGI-Maryland Strategic Energy Investment bill (SB 268).

Maryland is already a party to the Regional Greenhouse Gas Initiative (RGGI), which is a compact of 10 eastern states (Maine, Vermont, New Hampshire, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Delaware and Maryland) committing to a 10% reduction in total power plant Co2 emissions from an average of 2004, 2005 and 2006 baseline years by 2020. RGGI calls for reductions through a--government-mandated--market based cap and trade scheme involving the auctioning and trading of carbon allowances. You know the same Kyoto style regime that has created energy rationing, raised energy costs, generated huge windfall profits for utilities, and INCREASED Co2 emissions in Europe, but I digress.

The defeat of SB 268 does not remove Maryland from the RGGI pact, merely it puts the status of auction and trade proceeds into limbo.

The first RGGI trade took place last week at $7 per ton. Based on Maryland Energy Administration calculations, the fiscal note for SB 268 estimated $7 as the high end of the allowance sales and projected $262.5 million in annual revenue. If the $7 price holds, guess who will be on the hook for the $262.5 million? That’s right, ratepayers. Maryland power companies purchasing these allowances will pass the cost on to ratepayers. Think about that for a moment. $187 million in BGE stranded costs was going to cost ratepayers $170. How much will $262.5 million cost us?

As O’MalleyWatch noted Senator EJ Pipkin tried to cap the sales at $3 but his amendment was rejected 27-19.

Essentially the argument has come down to whether the proceeds would be better used by providing direct rebates to ratepayers or giving it to the Maryland Energy Administration to foster conservation and efficiency programs.

Unsurprisingly, environmentalists and MaryPIRG folks believe that giving money to the bureaucracy is the best way to go.

Brad Heavner of Environment Maryland said that funding the MEA for conservation programs is the way to go to reduce pollution “If we don't spend this money in the right way, that effort will have failed.” I guess Heavner doesn’t realize that carbon dioxide is a “pollutant” that flora uses to live, creating a byproduct called oxygen, which we selfish humans use to breathe.

Johanna Neumann, back in January, said, “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.”

Efficiency and conservation plans sound great but they are a siren’s song. California, the environmentalists’ gold standard when it comes to state-level conservation and efficiency policies, ranked in the top 10 for states that increased their Co2 emissions in 2007. The increased emissions stemmed from increased demand. Even with all its vaunted demand side management and efficiency programs demand spiked and emissions increased. Efficiency programs can only go so far, and there is a real limit on the amount of reduction of Co2 emissions from power plants that you can impose without creating real trouble.

On a side note, if darling California can't control Co2 emissions from its power plants because of demand spikes, with all its non-greenhouse gas power available, how is Maryland supposed to do this?In fact, Maryland ranks fairly low in both CO2 emissions and intensity (tons per megawatt hour). Maryland ranks 33 and 28 respectively.Maryland, already has low CO2 power plant emissions, and is already committed to reduce them through the RGGI. The Global Warming Solutions Act is idiotic piling on that will only serve to further increase energy costs, destroy jobs and tank the economy.

This is why SB 268 is such a contentious issue because it highlights the stark reality that empty, feel-good environmental policies have very substantial and dangerous effects on energy costs, not only for ratepayers, but also for economic activity in general, which also hits ratepayers other areas like food and transportation costs.

That is the real issue at hand, but not one that O’Malley and his environmental allies want you to see. In fact every time the real costs and hard choices come to the fore environmentalists decry it as a false dichotomy as Maryland director of the Chesapeake Bay Foundation, Kim Coble did, “Once again, the unfortunate story here is that the opposition has boiled this down to the environment against jobs.”

As I’ve said ad nauseum, O’Malley and the environmentalists are trying to have it both ways. They are trying to fool us into thinking that they can impose dangerous environmental policies without raising energy costs. The stark reality is that they can't. The real choice they face is between protecting jobs and voting for a feel good law that will have no detectable effect on global temperatures. There is just no way around that.

Thankfully, some Democrats in the Senate, like Nathaniel McFadden and Joan Carter Conway realize the dangerous ramification SB 268 will have on ratepayers. Given the Senate's reconsideration, we shall see how much they really do care.