Tuesday, November 23, 2010

Elections Have Consequences: Squeezed

Explanation: This is the first in what I expect to be a periodic ongoing series that I'm calling "Elections Have Consequences."  Posts in this series will be exclusively about topics that indisputably would not have arisen but for the Commonwealth's decision to maintain the status quo in the November 2010 elections... 
I love orange juice.  It's one of the few things that I have to have every day, and that  I will go significantly out of my way to get if none is readily at hand.  Ordinarily I'm a Tropicana Pure Premium guy (some pulp).  Every now and again though, I indulge in some fresh-squeezed at a little market where I sometimes stop for coffee on the way to work.  This truly is an indulgence; a decent-sized cup of the stuff runs me roughly three times what my usual Tropicana (which is no bargain itself, mind you) costs.  But there really is a difference.  The stuff tastes just magnificent.  And - added bonus - signage near the display informs me that the juice is squeezed locally, from oranges grown "sustainably."  I have no idea what that means in the context of orange production, but it sounds good and takes a little bit of the edge off of the admittedly irrational decision to spend as much on a cup of juice as I might ordinarily shell out for an entire meal. 

Anyhow, this occasional splurge is my decision - freely made.  I imagine I'd feel differently about that delicious and sustainable OJ were my state government to suddenly order me to purchase it every morning from here on out.

That's basically what is happening to consumers of electricity (so: everyone) on the Cape and Islands.  Government bureaucrats have decided that beginning some time in the next couple of years, those consumers will be obligated to purchase power generated by the long-delayed Cape Wind project - at roughly twice the cost of electricity generated using natural gas. 

How does that make sense?  Well, the Department of Public Utilities (the state regulatory body that this week gave final state clearance for the energy purchase deal) is quite clear on that, as quoted by the Globe:
“The power from this contract is expensive in light of today’s energy prices,’’ the 374-page DPU decision says. “It may also be expensive in light of forecasted energy prices, although less so than its critics suggest. . . . However, it is abundantly clear that the Cape Wind facility offers significant benefits that are not currently available from any other renewable resource.’’
Points for candor I suppose.  And what are those "significant benefits?"  It's not hard to guess (again from the Globe):  "Among those benefits, the administration has long said, are cleaner air, reduced reliance on fossil fuels, energy security, and a more diverse mix of power sources."

So Cape Wind's energy, like my boutique OJ, is squeezed locally and produced sustainably - and as a result it comes at a significant price premium.  Unlike my OJ, Cape Wind's power will not taste terrific or help the residents of the Cape and Islands ward off the common cold.  And the consumers in question won't have the option to decline the high-priced purchase and keep drinking Tropicana - or frozen Food Club for that matter.

"But wait!" I hear the shaggily bearded fellow in the back saying.  "Cape Wind is necessary for the state to meet its renewable energy targets!"  True enough.  As the Globe reports, "The DPU decision was made, in part, because Cape Wind is necessary to meet a state requirement that utilities buy 25 percent of their power from renewable sources by 2030."  Of course that target wasn't writ by the hand of God - it was established pretty much arbitrarily, by the same meddling bureaucrats who now cite the target to justify the pending mandatory purchase of over-priced power.  It's the all too common self-fulfilling regulatory policy/mandate cycle: "We have to do X because we said we have to do X."

 "Hang on!" hollers the mu-mu cloaked woman down front.  "Folks understand the need to move away from fossil fuels, both for the environment and for reasons of national security."  True that.  But Vermont currently purchases delicious, sustainable power from Hydro-Quebec for six cents per kilowatt hour, less than a third of the projected cost of Cape Wind power.  When compared to more cost-effective renewable sources of energy, the case for Cape Wind actually becomes weaker, not stronger.

"Fearmonger!" screeches the college kid in the Che Guevara t-shirt.  "The Globe said Cape Wind will cost consumers less than $2 per month!"  True again.  But only because construction and operation of the facility is going to be heavily-subsidized by both the federal and state governments.  So not only are Cape and Island consumers forced to pay more than they should for power, the rest of us are going to help them do it.  Those of us who live elsewhere will buy the fresh-squeezed, but we won't even get to drink it!  But let's not underestimate the impact of that estimated $2 per month.  According to the DPU, that will add up to an estimated $420 to $695 million total cost to consumers over and above what they would otherwise pay for energy over the course of the contract.  That's a lot of OJ.  And "estimated" is a key word here - if past is prologue, then the "estimates" associated with Cape Wind will continue to be significantly below eventual actual costs.

All for what?  Let Governor Patrick tell you:
“This project is all about our clean energy future, and today that future is closer than ever,’’ Governor Deval Patrick, a champion of the project, said in a statement yesterday.
Such soaring sentiment is sure to warm the heart cockles of the small businesses that are already on the edge, at least in part due to the Commonwealth's highest-in-the-nation (before Cape Wind!) energy costs.

Charlie Baker liked to say Cape Wind is the wrong project at the wrong time at the wrong price.  Deval Patrick, who never lets cost to the taxpayer get in the way of a feel-good press conference or a happy talking point, has persistently maintained that the exorbitant cost of Cape Wind is "worth it" -a sanctimonious pronouncement from on-high that was predictably echoed by Patrick's appointees on the DPU in their decision this week.

Elections have consequences.

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