Please Don’t Frack
Regular readers of my weekly column may be shocked at my suggestion: “please don’t frack.” But, bear with me. The terms “frack,” “fracking,” or “frack job” have become a part of the vernacular. “Frack” is short for “fracturing.” It generally refers to the process used in drilling for oil and gas known as hydraulic fracturing—a process where pressure is applied to crack rock. Fracking is responsible for America’s new-found abundance of oil and natural gas—hence, the opposition from environmentalists. As the Sierra Club’s Beyond Natural Gas website states, this abundance “displaces the market for clean energy.”
Displacing the market for renewables is bad news for the Obama administration—which has allocated nearly 100 billion taxpayer dollars for so-called green energy projects. Obama’sEPA—under the direction of Lisa Jackson—has repeatedly, unsuccessfully, attempted to tie fracking to water contamination. If fracking can be found to be unsafe, and therefore banned, America’s domestic oil and gas will be kept in the ground, jobs will be lost, energy costs will soar—and renewables can come in as the solution with newfound cost parity.
But, it is not just about oil and gas. Coal was the first target of the Obama administration’s attack on energy. Using the now discredited ruse of manmade climate change caused by CO2 emissions, the White House pushed for a cap and trade bill that would have artificially raised the price of energy. Even with Democrats in control of both houses, thanks to an uprising of the American public in the Summer of 2009, cap and trade never passed. Undaunted, the Administration has continued to push crippling energy policies through executive order, regulatory action, and bureaucratic bumbling. The result has been thousands of jobs lost in coal country where the real unemployment rate hovers around 20%.
Americans are beginning to wake up. On July 10, Iraq war veteran and coal miner Jimmy Rose captured the national spotlight and became an overnight sensation on America’s Got Talent with his heartfelt song “Coal Keeps the Lights On.” Rose poignantly sings about the benefits of coal and in verse two brings it home: “They went plumb crazy in Washington. They’re talking about closing the mines. They’re gonna bleed us all dry from the inside out. They don’t care that much about the little man or the calloused hands. It’s a way of life ‘round here, just like it’s always been.” The crowd went crazy. The video went viral.
There is hope of turning these bad policies around before it is too late: the 2014 election—which means the Republicans need to win. Unfortunately, energy has become a partisan issue with the Republicans generally supporting responsible energy (the stuff that actually works) and Democrats supporting hope and change (the stuff they hope will change and someday actually work).
For the Republicans to win, they need to come together—which will be a challenge given the current fracturing in the party. Republicans are fractured over whether or not to collect phone data on American citizens; shut down the government over defunding Obamacare; secure the boarder first or go for big immigration reform; and Rand Paul vs. Chris Christie.
Imagine my delight when, after working on energy issues for the past seven years, Republican representatives began coming out repeatedly in support of effective, efficient and economic energy—pushing for the economic boom and job creation that would result from developing our domestic resources. Finally, they got it. Republicans are joined by many Democrats in their support of single energy issues like the Keystone pipeline and coal mining. On energy, they seem to have unity.
Coming from this perspective, I was shocked to receive a victory announcement from a group using the name “Tea Party”—specifically the Atlanta Tea Party Patriots. The victory announcement was celebrating the July 11 vote by the Georgia Public Service Commission mandating 525 Megawatts of solar energy added to Georgia’s electricity generation no later than December 31, 2016. I thought, how can a group that stands for fiscal responsibility and limited government be for any kind of energy mandate—but especially one that will cost the ratepayer more? I assumed that they must have co-opted the name, but no. I reached out to Jenny Beth Martin, co-founder of Tea Party Patriots. The response: “Tea Party Patriots has taken this as an issue.”
At a time when many states are backing away from solar (and all renewables), the “Green Tea Coalition” partnered with the Sierra Club to push for solar energy in Georgia—a state that doesn’t currently have a Renewable Portfolio Standard (RPS) that requires the use of renewable energy. Following this victory, the “Green Tea Coalition” is pushing the adoption of House Bill 657: The Rural Georgia Economic Recovery and Solar Resources Act of 2014. This legislation has several rural Republican legislators as co-signers. President Obama must be smiling over Georgia conservatives and Republicans openly supporting his energy policies.
In my home state of New Mexico—where there is an RPS, the Public Regulatory Commission (PRC) is currently considering a rule change. Formerly, the commissioners instituted a “diversity rule” that mandated predetermined amounts of specific renewables. The diversity rule has created false markets and required the utilities to purchase distributed solar (electricity generated from panels on rooftops of homes and businesses) at retail—basically the price the panel owner is paying for the electricity it gets from the grid (usually 3-7 times the wholesale price). But, the utility has many additional costs that make up the difference between the wholesale and retail price—costs that are being recovered from the entire rate base. So those of us who cannot afford solar, are paying for those who can afford the upfront costs. The make up of the PRC has changed and in an effort to protect the ratepayers—which is their mission, the commissioners want to eliminate the diversity rule and allow the utility to meet the RPS with least-cost renewables. The Sierra Club vehemently opposes the change and has mounted a campaign to keep “diversity.” They claim the rule change will hurt the state’s fledgling solar industry.
New Mexico is not the only state facing such issues. On July 31, Fox News featured a story: “States argue for cutting off solar subsidies.” In it, Hawaii state Rep. Marcus Oshiro is quoted as saying: “We want to support renewable energy, but not at the expense of all the taxpayers who are heavily subsidizing this one component.” The report continues: “There’s a similar backlash in Arizona, where the state’s largest utility wants out of what it considers a regulatory nightmare, which requires non-solar ratepayers to pay solar companies 25 cents per kilowatt hour for electricity it can generate or buy elsewhere for a nickel.” Arizona Public Service CEO Don Brandt says: “We estimate that the average rooftop solar system on an Arizona home adds $20,000 in costs for non-solar customers over its lifetime.”
In Louisiana, Gov. Bobby Jindal has signed legislation phasing out the state’s tax credit for solar energy. The credit will expire at the end of 2017. Regarding the Louisiana bill, Daniel Simmons, director of state policy at the Institute for Energy Research, explains: “Louisiana is only recognizing the obvious—that they were subsidizing a source of energy that has been on the public dole for years, and now is the time for solar to stand on its own two feet.”
Despite the widespread move away from subsidized solar, Debbie Dooley, co-founder of the Green Tea Coalition, is quick to defend her stand: “Atlanta Tea Party and other tea parties supported the addition of solar on the basis of moving closer to the free market for energy. We were satisfied there would be no Solyndra type subsidies if additional solar was deployed and the addition would not cause upward pressure on rates and would be in the best interest of rate payers.”
Experience from other states shows that solar does “cause upward pressure” on the entire rate base. Commissioner Stan Wise, who in his dissent statement, called the vote a “force-fed mandate,” added an amendment that prohibits Georgia Power from accepting any bid that is above the utility’s levelized avoided costs—so the entire fight may be moot. Yet, it has fractured the conservatives in Georgia.
Patti Gettinger, Energy Policy Director for the Georgia Tea Party Inc., told me: “It is repulsive to see green energy use the tea party movement in its rent-seeking activities, particularly when all evidence indicates that industry is an utter failure without heavy subsidies and government intervention—the very things the tea party opposes. Given the poor outcome of RPS in other states, for the Public Service Commission to even consider something similar in Georgia is shocking.”
Wise states: “The commission’s approved program is mandating a specific renewable and by doing so has predetermined the winner—solar.” He sums up the Georgia Public Service Commission’s decision: “The Commission has engaged in a Washington-style, feel good energy policy, not based on economics or any rational public policy argument.”
In a time when Republicans, conservatives, and tea-party minded individuals need to come together, don’t fracture the unity on which these constituencies agree: energy makes America Great! Please don’t frack.
[First Published by Townhall Finance]