Sunday, May 18, 2014

The BUT FOR Costs of the PTC and RPS

Well this is interesting. 

There are a couple of key pieces of legislation that have failed this last week.  It appears the extension to the Production Tax Credit is dead in Washington for 2014.  NA WINPOWER is reporting the extension is dead.  Partisan politics is blamed.  Spin blaming partisan politics is a bunch of corporate propaganda baloney bull.  The American Wind Energy Association (AWEA) is such a strong lobbying organization, their influence reaches well beyond party lines. 

The problem for the AWEA remains. America’s support for subsidies for the wind industry has waned across party lines.  Americans has become exacerbated with the aggressive push by wind companies to site turbines everywhere in the Midwest.  Americans know there the propaganda behind “clean” energy is dirtier than what the industry likes to display.  While the wind industry’s lobbying efforts still garners much support, there is a clear trend of less support each year.   

Another key legislation died in Illinois this week.  According to Steve Daniels at Crane’s Chicago, the “fix” to the Illinois Renewable Portfolio Standard is dead.  The Illinois Wind Energy Association and its friends at the Environmental Law & Policy Center claim the fix died in Springfield because ComEd’s backed out of any support of a compromise with claims Exelon would be forced to shut down two or three nuclear reactors in Illinois. 

Again, when you let the wind industry spin their excuses for failure, when partisan politics can’t be blamed, a big ambiguous corporation will be the evil empire.  It’s surprising the wind industry doesn’t blame the ambiguous and mysterious Koch Brothers.  The billionaire brothers seemed to be blamed for anything else with the wind industry.  Then again, if you read between the lines in statements made at the AWEA WIND POWER2014 convention, the industry recognizes 2014 has been a rough year.

What the wind industry hates to admit is the Illinois Renewable Portfolio Standard “fix” will cost Illinois ratepayers more money.  With energy costs forecasted to rise dramatically this summer, in part due to paying for PJM  reserve capacity charges, legislatures really do not want to be blamed for further price increases.  So the bills sponsored by Senator Frerichs (candidate for State Treasure) and Representative Frank Mautino of Spring Valley looks to be dead for this year. 

Now the new term by the Illinois wind energy industry is “OVERHAUL” to replace “FIX”.  The Illinois Renewable Portfolio Standard should be called the WIND PORTFOLIO STANDARD.  As it reads 75% of the “clean” renewable energy is mandated to come from wind energy.  Solar has a far lower percentage and distributed generation with net metering (residential rooftop solar) is mandated to less than 0.05%. 

Seriously, the Illinois Renewable Portfolio Standard mandates less than half of one tenth of a percent of the energy comes from consumer based generation.  Who really wins from the RPS?  It isn’t the consumer.  Illinois ratepayers and even ComEd would be better off with a Renewable Portfolio Standard that mandated 4% Net Metering than one that mandates 20% wind energy.

Base load generation companies and the Illinois Solar Energy Association need to think about this.  Net Metering will not create the problems of negative pricing that are created by the Production Tax Credit and Renewable Portfolio Standards.  Net Metering is not the enemy of base load generation companies and the solar industry has nothing to gain when the RPS is weighted so heavily to the wind industry.

With 75% of the RPS being mandated to come from the wind industry, the RPS is a lobbyist created sweetheart deal for the wind industry.  It’s also Governor Quinn picking winners and losers with the wind industry lobbyists being the chosen “winner” and the ratepayers being the real losers.  

Do Illinois consumers really want Governor Quinn picking “winners” for them in the energy industry?

Ratepayers and consumers paying the wind industry through the Production Tax Credit and Renewable Portfolio standards is a big problem for the industry.  What was once governmental support for a tiny upstart industry has become subsidizing a fattened pig, but there is another problem with the PTC and RPS’s.

Michael Skelly of Clean Line Energy Partners LLC was the first to state it.  The low hanging fruit in the wind industry has been picked.  There are no more siting locations for wind farms without new transmission projects.  New transmission projects for the advancement of the wind energy industry means eminent domain.  With this, America has reached an ethical decision. 

Is it morally acceptable to use eminent domain to promote an industry that is heavily subsidized?

Yes eminent domain is not used to force siting of wind turbines. Many in the Midwest, people fail to see a difference to eminent domain to take land for wind turbine siting or taking land to site powerlines because there is no difference. 

There is a term used in the industry to classify certain costs.  “BUT FOR” costs are costs incurred by one company for an upstream project by another company.  For example, Rock Island Clean Line wants to put a transmission line from Northwest Spenser, Iowa to Channahon, Illinois.  ComEd argues there will be several switching, transmission, and substation improvements east of Channahon that ComEd with have to upgrade.  These upgrades will not be necessary BUT FOR RICL and therefore RICL should cover these costs.   

America has reached the point where transmission upgrades are needed but for the advancement of the wind industry through the Production Tax Credit and Renewable Portfolio Standards.  Without the PTC and RPS’s, there would be no need for transmission projects like the Northern Pass project through New England, Plains & Eastern through Arkansas or the Grain Belt Express through Kansas and Missouri. 

These proposed transmission projects would not exist but for government projects to promote industries definition of “clean” energy.  Unfortunately federal or state governments have no interest in compensating farmers and rural landowners for these perpetuity easements.  While politicians and bureaucrats see Midwest America as something less than BUT FOR costs, this issue is much larger. 

Is it morally just to abuse eminent domain laws for transmission projects that would not be considered but for the Production Tax Credit and Renewable Portfolio Standards?   

The answer is obvious to a sane, reasonable, and practical person.  Too bad sanity, reasonability, and practicality can sometimes be uncommon in capital legislatures.

This week morals, ethics sanity, reasonability, and practicality have won in Washington D.C. and Springfield, Illinois.  The PTC doesn’t get extended and the RPS does not get “fixed”.  This is bigger than one transmission project.  This is a fight for the basic freedoms and principals that make the foundation of America.  This battle is the new frontline of America’s energy war.

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