A new study from the Beacon Hill Institute at Suffolk University finds that Pennsylvania's Alternative Energy Portfolio Standards will costs Pennsylvanians millions in higher energy costs.
Pennsylvania must undergo a rapid transformation to reverse the poor policy decisions that have eroded economic freedoms and brought the state to its present condition. To provide a roadmap for success in this critical endeavor, the Commonwealth Foundation has compiled a list of 80 policy recommendations for Gov. Corbett and state legislators to help lead a Pennsylvania comeback. Each of these recommendations links to Commonwealth Foundation research with more information on
A lot can be spun from the results of the Nov. 2 elections, but one fact is uncontrovertible: Pennsylvanians are sick of centrally planned, highly regulated, gimmick-driven economic policy. It hasn't worked, and now they want results.
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The radical environmentalist group and corporate welfare lobbyist PennFuture has updated an absurd study about the "subsidies" Pennsylvania taxpayers pay for fossil fuels. While we oppose subsidies for any industry, most of PennFuture's "subsidies" are the absence of higher taxes on consumers.
PennFuture's analysis show less than $60 million in actual direct subsidy for fossil fuels (some of which is for alternative energy programs). What they consider a "subsidy" is not taxing certain goods and services.
Most of their "subsidy" total comes from not applying the sales tax to gasoline and electricity. That is, taxpayers would "save" by paying more in sales tax at the pump and in their heating bills.
But wait, you must be thinking, don’t we have a gasoline tax and an electricity tax?
Why yes, yes we do. They are claiming we are subsidizing gasoline by taxing it, but not taxing it twice.
- Almost 44 percent of these "subsidies" are for NOT imposing the sales tax on gasoline. Yet gasoline is taxed separately under the Oil Company Franchise Tax. In fact, as of 2015, Pennsylvania has the highest state gasoline tax in the nation.
Gasoline is exempted from the sales and use tax for that reason and that reason alone—it doesn't make any sense to double-tax a product. To suggest state taxpayers are "subsidizing" gasoline production by imposing a tax on gasoline (but not two taxes) is beyond ridiculous.
- Another 20 percent of these "subsidies" are for not imposing the sales tax on electricity and heating fuel. Again, these utility bills are taxed separately under the Gross Receipts Tax. Making consumers pay another tax on their electric bill or heating bill does not repeal a subsidy, and in certainly doesn't save taxpayer.
Both of these tax exemptions—making up almost two-thirds of PennFuture’s estimates of "subsidies"—suggest we should impose taxes on top of taxes on consumers at the pump or in their utility bills. Either PennFuture doesn't understand how taxes work, or are deliberately misleading their readers, but either way, they what they are suggesting is higher taxes on families.
Other "subsidies" include not taxing the government for its use of fuel (because we don’t tax the government for anything) and not imposing property taxes on the value of natural gas. This is a tax that would hit homeowners; it is not a subsidy for the businesses.
PennFuture seems to have no idea what a subsidy actually is. Ironically, they are lobbying for new subsidies, specifically $225 million in subsidies for alternative energy under Governor's Wolf budget proposal.
Worse yet, these subsidies will come from borrowed dollars. Governor Wolf wants to borrow funds and pay it back (with interest) using a new tax on natural gas severance. In other words, PennFuture not only wants to double-tax fossil fuels, they want to place a special tax on natural gas to subsidize cronies in the wind and solar power industry.
It's clear that these subsidization schemes not only punish taxpayers, but fail to create jobs. Pennsylvania continues to see anemic job growth, despite $2.9 billion in taxpayer-financed alternative energy loans and grants since 2003.
One third of the $675 million in new corporate welfare under Governor's Wolf budget proposal is reserved for alternative energy programs. In this week's House budget hearings Community & Economic Development Secretary Dennis Davin defended the new borrowing saying,“We think when you look at those opportunities as a whole ... Pennsylvania will do much better.”
But history indicates otherwise.
A common target of Gov. Rendell's "economic development" schemes was alternative energy companies, who enjoyed $1 billion in renewable energy grants, tax breaks and loans, but only created 8,300 "green" jobs, costing taxpayers over $120,000 per job. In other words, using tax dollars to subsidize green jobs resulted in a net loss.
Worse yet, taxpayers don't have the funds for this program. The Governor wants to borrow the money and pay it back with natural gas severance tax revenues.
Even if placing more debt on Pennsylvania families created jobs, it is still wrong to ask the natural gas industry to subsidize their competitors. Kevin Sunday with the PA Chamber put it well, "It's very ironic that Gov. Wolf expects one industry to subsidize its competitors," he said. "We certainly shouldn't be picking winners and losers."
At the end of the day, Pennsylvania has given more than a billion dollars to alternative energy companies with nothing to show for it: from 1991 to 2014, our state ranked a dismal 45th in job growth. Handing out tax dollars based on political calculations is stifling economic progress. Common sense tells us it's time to try a different approach—letting Pennsylvanians keep more of their money.
The war on coal will be a catastrophe for consumers, according to a new analysis of energy prices under new U.S. Environmental Protection Agency (EPA) regulations.
According to an Energy Ventures Analysis report, combined annual gas and electricity bills in Pennsylvania will increase by more than $1,000, or 46 percent by 2020 compared to 2012. Industrial power rates alone will increase by 62 percent.
The November report—"Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector"—says that Pennsylvania is among five states that "would bear the greatest increases in annual residential power bills." The others are Texas, Mississippi, Maryland and Rhode Island.
Commissioned by Peabody Energy, a St. Louis-based coal company, the report calculates state-by-state effects of a number of EPA regulations, including the Clean Power Plan to reduce carbon dioxide emissions.
Nationally, gas and electricity costs for all customers will increase by $284 billion, or 60 percent, says Energy Ventures.
The increase will result "in large part due to an almost 135 percent increase in the wholesale price of natural gas" as EPA regulations force coal out of use and drive up the demand for gas, says the report.
Numerous business groups and politicians are objecting to the Clean Power Plan, including Pennsylvania’s Democratic senator, Bob Casey, who says that the proposed rule for CO2 emissions, "imposes a disproportionate and unfair burden on Pennsylvania." And the Supreme Court recently announced it will review the regulations in the spring.
Energy Ventures also takes into account the economic effect of rules recently implemented to regulate ozone and particulate matter, the interstate transport of air pollution, mercury, and haze in public parks.
"Our analysis is the first to fully examine the combined economic impacts of the EPA's long list of proposed and finalized regulations on the electric power industry," says Seth Schwartz, Energy Ventures president. The Clean Power Plan is based on flawed assumptions, he says.
From skyrocketing energy bills to killing green jobs to raising manufacturers' cost, the EPA’s actions are harming all Pennsylvanians.
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The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.