Category Archives: Energy

Deepwater forgot to read PBN

In last night’s Channel 10 interview, Governor Carcieri’s former chief of staff – now lobbyist for Deepwater Wind, Jeff Grybowski, claimed that if Deepwater is allowed to create the larger wind farm “800 to 1000 jobs could be created.”

Unfortunatly, when Deepwater Wind CEO Bill Moore testified at the PUC, he admitted there was no evidence to prove that point and more recently the RI house of representative subcommittee on ports commissioned a report that shows future jobs supporting the ‘big wind farm’ probably would not materialize.

But why let facts get in your way.

Don’t forget to visit the RI Supreme Court today for the Toray Plastic/PoliTop case.

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Windy Pork

Published in the Providence Business News on Monday.

Offshore Wind is Pork

Should that matter to the RI Supreme Court

Deepwater Wind has accomplished something that we at the Ocean State Policy Research Institute (OSPRI) thought impossible. Their proposal to create 6 permanent jobs with $400 million in excess costs to Rhode Islanders makes the federal stimulus $646,214 per job look positively cost effective (Cato, 2009).

The truth is that neither is a good idea. Both show what happens when government money is funneled to politicians’ favored projects. This isn’t an allegation of corruption, per se, but recognition that government, operating without competitive pressures, isn’t very efficient and can’t out-perform the market when it comes to picking winners.

To be fair, the legislature has its eye on more jobs later, although no one has suggested how it can happen without even more enormous subsidies. And to add insult to injury, after all but ordering electric customers to spend the rent money on expensive windmills, the general assembly got a note of caution recently from a study for its special commission on ports. The report urged that Rhode Island go slow on investment in facilities for windmill support at Quonset, because the industry may not materialize.

But this is the purported pot of gold at the end of the ‘green’ rainbow that justifies us overpaying for electricity. What happened?

Despite Quonset’s extant facilities, the folks bilking Massachusetts ratepayers, Cape Wind, have decided to build from scratch in New Bedford, Mass. Shocking!

You start to see a pattern here?  The folks with an IV into our wallets in Rhode Island tout Rhode Island facilities, while these snake oil salesmen in Massachusetts offer the same patronage to Massachusetts.

Thankfully, although National Grid has thrown in the towel, no doubt thanks to a rich load of perks tossed in its direction, NSTAR the other major utility in Massachusetts, showed how effectively open bidding, rather than sole source contracting, can be for its ratepayers. NSTAR put its renewable energy contracts out for bid and market estimates show it will be paying under 10¢/kwh while the average pricing for Cape Wind and Deepwater Wind, considering escalators, is over 30¢/kwh.

This is a green apples to green apples comparison. Clean natural gas, which currently provides 97% of RI’s energy, is falling in price towards 5¢/kwh due to growing supply.

Even as the legislature gets a consultant’s report dismissing the promised benefits, the Deepwater project forges forward — facing perhaps its last significant governmental hurdle in the form of a case to be heard at the RI Supreme Court this Wednesday, Mar. 11th.

Should the emerging picture of these windmills as pork affect the Supreme Court review? The separation of powers tells us that policymaking is the job of the General Assembly and even if they made a bad decision to support Deepwater, it is not the Court’s job to act as a safety valve.

But the Court should take a “hard-look” at the administrative process that actually approved the contract. If, as it appears, the Economic Development Corporation’s testimony that economic benefits would flow from this project did not consider relevant factors in an open process, this undercuts the reliance courts normally place on agency decisions.

OSPRI has filed an Amicus Brief in the case asking that the court take cognizance of the “hard-look” doctrine in federal precedents that requires a court not only to find the administrative decision plausible, but to look to whether the decision was “fully reasoned”.

The RI Supreme Court has embraced the early “hard-look” precedents. Then Superior Court judge judge, O. Rogeriee Thompson, cited the penultimate in that line of cases, State Farm in deciding Manglass v. RIDHS, but the RI Supreme Court never reviewed that case. Now would be the time for the court to validate Judge Thompson’s citation and renew its commitment to the critical function of meaningful judicial review.

Agencies are not elected and yet they effectively make laws that govern our daily lives. There is no sleight to the separation of powers if courts take a “hard look” at agency decisions, so long as the court does not substitute its judgment for that of administrators. Typically, however, a decision that is deficient from a “hard-look” perspective is returned to the agencies for further consideration.

This is a process oriented rule, it may not result in a different decision, but it ensures that the fullest consideration has been afforded significant public policy decisions, and handing a $400 million bill to Rhode Islanders is just that.

From a political theory perspective this “hard-look” approach has a tension, serving as an implementation the separation of powers through the check and balance of judicial review while nonetheless mildly blurring the lines of the separate departments. To further public understanding of our arguments, we have arranged for a critique of their strong and weak points by visiting Brown University professor Steven Calabresi and others at the Political Theory Project at Brown on Tuesday, May 10th at 2:00.

Professor Calabresi teaches constitutional law at Brown, is a professor of law at Northwestern, a prolific legal author, a co-founder of the Federalist Society, and effectively a native son of Rhode Island. It is with great pride that OSPRI joins with the local Federalist Society organizing caucus to welcome Professor Calabresi to the legal theory discourse in our state.

Those interested in public policy generally and especially relative to the Deepwater Wind case are encouraged to attend both this forum and the court hearing.

Brian Bishop is the director of OSPRI’s Founders Project and Fellow on Regulatory Affairs.

Call to action

As you may know, after the PUC decision to approve the Deepwater Wind project the RI Attorney General, Torray Plastics, PoliTop, and the Conservation Law Foundation, filed appeals with the RI Supreme Court, along with amicus briefs filed by OSPRI and the RI Manufacturers Association.

Tomorrow, the RI Supreme Court will hear oral arguments on the issue of “standing” in this case.

These litigants participated with OSPRI before the PUC
with the withdrawal from the case by the new AG, the court has decided of its own accord to examine whether  CLF or Toray have interests allowing them to appeal.

Regardless of what you think of the substance of the case, if significantly affected businesses, like Toray and PoliTop, and public policy institutions, like CLF and OSPRI, are denied access to the courts, all Rhode Islanders will suffer from this lack of accountability.

While Toray and PoliTop seem clearly to  have standing, with millions of dollars and the jobs they provide on the line, both they and CLF will also argue that this is a compelling public policy issue meriting a “prudential” grant of standing.  One way the court will know this is a critical issue of public policy, is if the gallery is full of “the public.”

Please make time to  attend the hearing tomorrow at 9:30 AM at the Supreme Court Building, 250 Benefit Street, Providence, RI 7th floor – supreme court chambers.

45 and dropping

PBN reported on the “The Small Business Survival Index 2010″ showing RI ranking 45th on the “costs and burdens of government on small business and policy areas that enable their competitiveness and growth.”

The SBE pointed to Rhode Island’s high corporate income and corporate capital gains taxes, high property taxes, high unemployment taxes, highest number of health insurance mandates (No. 51), high electric utility costs, high gas and diesel taxes, and the state’s poor private property protections as weighing on its ranking. (emphasis added)

I added the emphasis on “high electric utility costs” to point out that the results of this report reflect current prices – not what we will be burdened with once the Deepwater (and other smaller) windmill projects get underway and energy prices rise even more.   It is reasonable to expect that our taxes won’t be going down  anytime soon either – so don’t be surprised to see  a lower rating next year.

Unintended Consequences

The central planners are at it again. This time with incentives (think cash for clunkers) for consumers to purchase energy efficient appliances.  Unfortunately, it won’t accomplish the goal of reducing energy consumption.  Why?

“If you buy a new refrigerator, where does the old one go? In the garage, for the beer,” Eric Burch told reporters.  Burch is the spokesman for the Indiana Office of Energy and Defense Development. “You have not reduced anyone’s energy efficiency. The old appliance is still on the grid.”

Are the elitists who want to run our life really that ignorant?  Or is there another motive?  Again, think Cash for Clunkers…

“We send the car through a shredder, which pulverizes it into palm-sized pieces of metal,” said Savage. “We turn around and sell those to manufacturers, who use them as raw feed stock. A lot of this material is shipped internationally, particularly to China, for office buildings and infrastructure.”

More Obama Transparency

During the president’s short tenure he has been called out more than once for saying one thing and doing another.  Congressman Trent Franks (R – AZ) continues the trend with the following press release:

“As news outlets seize upon what is being touted by the White House as a monumental shift toward increased offshore drilling, it is vital that we separate fact from fiction.

“The ironic reality is that the Administration’s new policy actually closes more offshore drilling sites than it opens

“The fact that the White House is promoting this policy as an ‘expansion’ of offshore drilling is so absurd it’s laughable. Sadly, however, I am afraid many Americans will not understand the full reality of what his plan actually does, and will celebrate his decision today as an actual step forward in decreasing America’s dangerous dependence on foreign sources of oil. The reality is that today’s announcement is nothing more than a spin job intended to disguise the harmful effect this Administration’s policies will have on our nation’s energy security.”

The Big Government Big Business Complex

In this 2009 interview with BusinessWeek, President Obama notes that the health care, education, and energy sectors, as well as the government, were resistant to changes in other sectors that boosted quality, efficiency, and productivity in the 1980s. Now he says he wants to bring health care up to speed. But guess why health care and the other two sectors were dragging their feet? The Heritage Foundation explains why:

But as others have pointed out, the reason the health care, education, and energy sectors all failed to improve quality, efficiency, and productivity in the 80s is because those sectors were, and continue to be, the sectors most dominated by government intervention: our education system is a near total government monopoly; the federal government controls the majority of health care spending in this country, and our environmental laws make new energy development in this country virtually impossible. But President Obama seems completely oblivious to these facts. He is supremely confident that his government “pro-business” interventions will be ahistorically successful. And so he confidently tells BusinessWeek: “You would be hard-pressed to identify a piece of legislation that we have proposed out there that, net, is not good for businesses.”

Never mind that President Obama’s cap and trade proposal would be worth billions to select power companies but cost the U.S. economy as a whole trillions of dollars. Never mind that his health care plan would turn health insurance companies into public-utility like monopolies at tremendous cost to small businesses. Never mind that the President’s big labor-friendly tax hikes would cripple American competitiveness. President Obama’s “pro-business” TARP related actions helped lower the United States rank in the 2010 Index of Economic Freedom, from “free” to “mostly free.”  The President must stop having behind-closed-door meetings with his favorite CEOs and start pursuing an economic agenda that helps everyone.