NOTE AT THE BEGINNING: TODAY’S EXERCISE DEALS WITH A COMPLICATED MATTER, PERHAPS TOO COMPLICATED TO DIGEST IN ONE SITTING. SO WE’RE GOING TO DO IT IN TWO SITTINGS. THIS IS THE FIRST

Sometime this week, the State Senate is scheduled to vote on H.446, a bill which has broad support and intense opposition.

There’s not much doubt about the outcome. The Senate is likely to follow the lead of the House, which passed the bill on April 21 by a 94-42 vote margin.

But that’s no guarantee that the measure will become law, because among those intense opponents is Gov. Jim Douglas, who said the bill “adds to the cost of living in this state.” The governor has not said he would veto the measure. But considering what he and others in his administration have said about it, a veto seems likely.

But not certain to be sustained. The vote in the House was not quite enough to override a veto, but several members were absent that day. With full attendance, there might be the 100 votes needed to override, and the Senate margin of approval seems likely to be even bigger.

At first glance, the intensity of the opposition seems hard to understand. Not that there’s anything mysterious about the opposition itself. H.446, titled simply, “An act relating to renewable energy and energy efficiency,” would increase almost everybody’s electric bill, reason enough right there to conclude that it’s a bad idea.  It also calls for an unusual, if tentative, intrusion of the Legislature into the regulatory process routinely handled by the executive branch.  There’s reasonable opposition to that part of the bill, too.

Still, nothing in H.446 would  require a dime from the state treasury, threaten anyone’s personal liberty or property rights, offend anyone’s religious or ethical standards, or degrade the quality of the air, land, or water. It’s basically an economic development scheme, not the sort of legislation that usually gets the blood running hot.

But Public Service Commissioner David O’Brien said there was “so much wrong with this bill that it’s hard to know where to start,” and called it  ”the most fundamentally flawed legislation” he has encountered as head of the Department of Public Service.

The Republican State Committee even charged that there was corruption involved. According to the Republicans, ” Democrats voted to increase the electric rates on hard-working Vermonters and Vermont businesses by $19 million. ..because big donor, special interests are telling them to.”

The Republican statement then named three executives of alternative energy firms, which are likely to benefit from the legislation, who contributed a total of $80,000 to Democrats since 2003.

O’Brien partly agreed. “This is special interest legislation,” he said.

It is.

Not that there’s anything unusual about special interest legislation, which often serves the public interest. Tilting the playing field to encourage one economic sector or another is as American as apple pie and as Vermont as maple syrup. It’s the mechanism (often supplemented by direct subsidies) that the country used to build the railroads, settle the West, and create suburbia. Vermont uses special interest laws, favorable regulatory decisions and plain cash grants to further the interests of dairy farms, logging firms, and the Vermont Yankee nuclear power plant.

There has always been some unease about this approach. Critics brand it “picking winners,” instead of relying on the free market to determine price and production levels. That helps explain the opposition. It doesn’t really explain the bitterness of the opposition.

As originally written, H.446 would have set the prices that renewable energy firms could charge. As amended by the House, the Public Service Board would be authorized to review and alter the prices set in the law -30 cents a kilowatt hour for solar power, 20 cents for wind power, and 12 cents for farm-produced biofuels. But the Board would be able to order price reductions only if the cost of producing the power were lower than anticipated, not because of the cost-impact on consumers.

Those prices are a lot more expensive than the roughly 6.5 cents a kwh most residential Vermonters now pay for actual electricity generation (transmission and other costs bring the total to closer to 13 cents per kwh).

But only a statewide total of fifty megawatts of renewable production would be eligible for these higher rates. That’s slightly less than five percent of the state’s total use. The actual cost increase for a household, then, is estimated to be between one percent and 3 percent. The family now paying $100 (that’s on the high side) would pay something like $101 or $103 instead.

That’s more, if not much more. Then the two sides get into a debate over whether the difference is likely to shrink or grow. O’Brien worries that the five megawatt limit is “the nose in the tent,” and that it could go up in the future. It could, but only if the Legislature changed the law.

On the other side of the debate, Andrew Perchlik, the head of Renewable Energy Vermont, the trade association for the renewable energy industry, pointed out that the price of Vermont’s other electricity sources is bound to go up in the near future, reducing the price margin between, say, nuclear and wind or solar.

“Right now the market is at a historic low,” Perchlik said. “Nobody’s predicting these prices (of conventionally-produced power) to go down.”

The two sides are so far apart that in addition to not agreeing on what will happen, they have different views about what has already happened. O’Brien, for instance, said that experiments such as the one envisioned by the bill have failed in Europe, especially Germany.

“It hasn’t yielded cost-effective power resources for customers,” he said. “People have paid premium price.”

They have. But then everything is more expensive in Europe (including lunch, which is also better, so maybe worth more; but that’s a separate discussion.) Besides, according to Ed Regan, the head of the Gainesville, Florida, electric utility system (Gainesville Regional Utilities), who went to Germany to see what was happening over there, Germany’s alternative energy system is a success.

“They’re going gangbusters,” he said. “They have the leading position in solar energy.”

And in an email, Enrico Brandt of the German Embassy’s Press section, said his country’s “Renewable energy Sources Act is the most effective funding instrument (and) international observers see it as exemplary.” Germany did change its system just this past January, Brandt said, but by expanding it because it is so successful.

So, said Regan, is the similar system in Gainesville.

“It’s fostering jobs and giving people the opportunity to invest in energy resources where they can make a good rate of return.”

That’s exactly the hope of H.446 and its supporters. This is not a carbon reduction plan to fight global warming, though that’s could be a possible side benefit. But the basic idea, according to Perchick, is “to send a message to the whole (renewable) industry, OK, here’s the price. We think you can build renewable energy at this price.”

The result, Perchik said, would not simply be more renewable energy; it would be more energy produced by Vermont firms and hiring Vermont workers. Right now, Vermont gets most of its power from companies based in Louisiana and Quebec. The purpose of this legislation is to try to get more of it produced by Vermonters in Vermont.

Which is exactly what veteran utility regulators like O’Brien find so objectionable.

“I don’t believe in using energy policy as economic development,” he said. “If you’re an electric utility customer you should pay the cost of what’s needed to provide you with power.”

That’s a traditional and reasonable point of view for a Public Service Department Commissioner, especially a Republican Public Service Department Commissioner who thinks the market, not politicians, should make basic economic decisions.

The problem for O’Brien and Douglas is that the broad support for the bill indicates that the people do not agree with them. So does a poll taken some 17 months ago, a poll commissioned by…O’Brien’s department

NOTE AT THE END: COMING UP– THE PEOPLE AND THE POLITICS OF RENEWABLE ENERGY.

AND ANOTHER NOTE: Because it must be noted. We all make mistakes. But this is too much. In the very first paragraph of its Sunday editorial, the Burlington Free Press said, “Diverting $350,000 from the state’s student aid fund to help a small private college stay afloat is hardly the best use of public education dollars when everyone – students and public schools – are feeling the recession’s squeeze.”

Oh everyone are, are it?

Listen, everyone. Everyone is a singular noun. Not ‘everyone are.” ‘Everyone is.”

But don’t the plurals inside the hyphens confuse matters. No. Dumb, dumb, dumb, dumb, dumb.

Does such mental sloppiness invalidate the contents of the editorial? Of all the Free Press editorials?

Good question.

AND A FINAL NOTE: Jack Kemp never lived in Vermont, and the only time he ran for office here, as Bob Dole’s vice presidential running mate in 1996, his ticket lost. But his death, too young at 73, should not go un-remarked. Wherever you lived, whatever your views, this “bleeding-heart conservative “(his own label) was one of the most decent American politicians of our time.

Tags: Gainesville FL, Germany, renewable energy

This entry was posted on Monday, May 4th, 2009 at 12:15 am and is filed under Business & Economy, Energy & Environment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.