Editor’s note: This op-ed is by John McClaughry, vice president of the Ethan Allen Institute (www.ethanallen.org).
In the past month Vermont newspapers have published several banner headline stories that lifted the veil on the activities of the Clean Energy Development Board. Here’s some useful background.
For years Sen. Peter Shumlin’s main political cause has been banishing the Vermont Yankee nuclear plant from the state. In 2006 the legislature gave itself the power to prevent the Public Service Board from considering an extension of the plant’s “certificate of public good” to operate beyond 2012. Under that act, Senate President Shumlin engineered a Senate vote last February to in effect shut down Vermont Yankee.
It’s politically awkward to clamor for the shutdown of a clean, safe, reliable low-cost nuclear plant without explaining how to fill the hole caused by the loss of its 600 Megawatts of base load power. The first answer is conservation: persuade people to consume less electricity. Beginning in 1999 all ratepayers have been explicitly taxed on their electric bills to finance a state “energy efficiency utility” to subsidize selected ratepayers (for instance, Green Mountain Coffee Roasters) to get them to conserve electricity.
But that’s not enough. This strategy requires lots – some would say a staggering amount – of renewable electricity from wind, solar, hydro, and methane produced by cattle and landfills. This electricity costs much more to produce than power from Vermont Yankee or the New England power grid, which includes coal and gas fired plants. How to make people enthusiastic about paying lots more for electricity? Not a problem. Make their competition more expensive.
Senator Shumlin and his allies at VPIRG raised the Menace of Global Warming, to justify raising the costs of fossil fuel energy. They determined to get rid of the nuclear plant altogether (even though it emits almost none of the feared greenhouse gases.) Until that can happen, in 2012, they imposed all sorts of new taxes on the owner of the plant. The $28 million thus extorted was assigned to a new Clean Energy Development Fund. It would then distribute grants and tax credits to renewable energy producers, without which nobody would buy their high priced and unreliable electricity.
Shumlin named to the board David Blittersdorf, founder of NRG Systems and a leading advocate for renewable electricity produced by his company’s customers. The board hired the executive director of the renewable energy business association to manage the distributions to producers. Any notion that the funds distributed by the board should benefit ordinary ratepayers was explicitly repealed in 2009.
But just subsidizing renewable energy producers isn’t enough. The electrical utilities must be required to buy the high-priced electricity they generate. Thus Shumlin twice pushed through strengthening amendments to the SPEED program, that essentially requires the electric utilities to meet their demand growth by buying renewable energy. On top of that, the Shumlin-backed “feed in tariff” provision instructs the Public Service Board to tell the utilities how much they must pay for this power that they would otherwise not buy: 20 c/kwhr for wind and 30 c/kwhr for solar photovoltaic.
A crowning step would be enactment of a cap-and-trade system to tax fossil fuel users and use the proceeds to subsidize the producers and purchasers of renewable electricity. This, however, came up short in the 2009 session. Still to come, promised by candidate Shumlin, is the issuance of “renewable energy bonds” to further feed the industry.
So here it is in a nutshell. Shut down the nuclear plant. Impose higher costs on fossil fuel electricity. Hand out grants and tax credits to subsidize producers to produce higher priced renewable energy. Require the utilities to buy that energy at prices up to six times that of nuclear electricity. If this isn’t enough, have the state borrow to keep the game going.
Since Shumlin is running for governor, the fact that Shumlin’s appointee Blittersdorf sat on a board that handed out subsidies that advanced Blittersdorf’s business interests put the story on page one. To his credit, Shumlin asked Blittersdorf to resign from the board. Blittersdorf eventually did so, after having approved a tax credit distribution policy that later handed out $4.3 million in valuable tax credits to solar PV generators economically linked to his own businesses.
Shumlin, Blittersdorf, VPIRG and their allies have promoted a remarkable combination of junk science, polar bear hysteria, nuclear phobia, business mandates, hidden taxes, price fixing, corporate welfare, government debt, and subsidy handouts to benefit – well, mainly themselves.
If you wonder why Vermont is so often viewed as a state afflicted with all sorts of government interventions to promote politically correct liberal enthusiasms – and thus unfriendly to the workings of a normal market economy – look no further.
