Ohio SB 310: Energy Users Best the Cronies (GE, AWEA, etc.)

by Kevon Martis
May 30, 2014

“But the truth is that Ohio’s renewable energy mandates have largely benefited only one group: entrenched monopoly fossil utilities like AEP, Iberdrola, and corporate behemoths like GE.

But what should we expect? It was their idea in the first place.”

Senate Bill 310’s attempt to freeze Ohio’s renewable energy mandate has elicited the typical partisan howls from Ohio’s green energy profiteers. They have been quick to paint the supporters of SB310 as slavish supporters of the much maligned Koch Brothers, FirstEnergy or other “dark fossil corporate profiteers”.

Curiously, these environmental group’s normally exquisitely tuned “corporate conspiracy radar” appears to have developed a massive wind-turbine-sized blind spot.

  • In 1998 it was Enron’s Ken Lay who  implored George W. Bush to extend subsidies for wind energy.  A quick scan of his letter reveals talking points that today could easily be mistaken for the Ohio Sierra Club: “Wind is the fastest growing new electrical generation technology in the world today and has rapidly decreased its production costs until it is close to being competitive with conventional generation technologies.”
  • But as shown by Sierra’s willingness to take $26 million from gas driller Chesapeake Energy to fight coal, their policy positions can be very nimble indeed-for a price.
  • After Enron’s epic fail their wind business was scooped up by General Electric. GE’s power generation unit saw great opportunity in the growing alarm over global warming.
Traditional coal plants last a very long time, 60 years or more. It is hard to sell new plants when they obsolesce so slowly. But if new CO2 regulations could begin to force premature retirement of still-serviceable coal plants, GE could fill that generation void with new gas generation. Every megawatt of retired coal generation could then be replaced with new (GE)  gas generation.

That is a fine start but what if there were a way to sell two or three or four megawatts (MW) of new capacity to replace one MW of prematurely retired coal generation?

Intermittent wind energy that is wholly reliant upon gas generators for grid integration was the key. But how to create a market share for expensive wind energy which typically arrives at times of low demand and low price?

Enter state renewable energy mandates like Ohio’s SB221.

GE’s business is generators. As board members of the American Wind Energy Association (AWEA) they have been at the vanguard of promoting and protecting renewable energy mandates. Since wind energy is variable and intermittent in output due to the vagaries of weather, one cannot simply replace 1,000MW of baseload coal generation with 1,000MW of wind generation.

Replacing such a coal plant with wind generation requires one to construct approximately 1,000MW of gas-fired generation to balance and backup wind’s erratic output. For GE that is win-win. They get to sell 2MW of new generation to replace 1MW of perfectly serviceable coal generation being prematurely retired by EPA regulations.

But even better for GE is the fact that wind turbines last 20 years- at best. Thus, over the 60 year life of a typical coal plant, not only do ratepayers need to pay for a new 1,000MW (GE) gas generator, they are also compelled to buy 1,000 MW of  GE wind turbines AND replace them at least two more times over 60 years.

Thus, through the magic of EPA regulation, coupled with high level PR  air support from willing accomplices like Sierra Club and furthered by renewable energy mandates like the one SB310 hopes to freeze, corporate giant GE has struck a largely tax free green bonanza.

Our “corporate conspiracy” search does not end there. A quick review of the AWEA’s  board of directors reveals an interesting cast of fossil fuel characters indeed.

Iberdrola Renewables’ corporate parent is among the largest fossil  utilities in Europe. An aggressive opponent of SB310, Ohio wind operator Iberdrola also owns significant fossil fuel generation in the US. Wind works well for Iberdrola:  in just one year their US wind investments allowed them to strip mine  $1 billion from the US tax code and export it to Spain.

Along with German utility E. On Energy and  FPL/NextEra, Ohio’s fossil giant AEP also enjoys a place on the AWEA board. Could it be that wind subsidies are really just more fossil subsidies?

There are many solid reasons for Ohioans to support freezing  renewable energy mandates.

SB221’s  instate renewable energy generation mandate violates the Commerce Clause of the U.S. Constitution. Worse, Ohio’s wind resource is anemic relative to its western peers. This means OH wind is roughly twice the price of Iowa’s or Minnesota’s.

Still worse for Ohio’s environment, the center/left Brookings Institute, deeply concerned about climate change, now reports that wind and solar energy mandates like SB221 are the most costly and least effective means of reducing greenhouse gas emissions.

Anyone can play “find the (Koch) bogeyman”.

But the truth is that Ohio’s renewable energy mandates have largely benefited only one group: entrenched monopoly fossil utilities like AEP, Iberdrola, and corporate behemoths like GE.

But what should we expect? It was their idea in the first place.

The good news appears to be that Ohio will stop the renewable charade. Tom Stacy, an “Ohioan for Affordable Electricity,” offers his plaudits for Substitute SB 310 that  passed the Ohio House and Senate and now awaits gubernatorial approval to become law.

Appendix: Tom Stacy on Ohio Win
“This is a win for ratepayers, Ohio’s economy and its environment,” he said. “Ratepayers can rest assured that rates won’t rise due to ‘self inflicted measures’ at the state level even while their federal government’s EPA has us in a head lock.”
Ohio’s bread and butter industries and employers are energy intensive, some consuming as much as $200,000 worth of electricity per employee per year.  Escalating costs could have catastrophic effects on wages, benefits, expansion plans and even employment if any one of those manufacturers ‘pulls the plug’ on Ohio operations due to escalating energy costs and projections.”

“From the environmental side, it is unfortunate groups such as Sierra Club, Greenpeace, Union of Concerned Scientists, Natural Resource Defense Council and others whose stated mission and public image is environmental improvement often have agendas that prevent pursuing such laudable goals in the most cost effective ways. Some appear to despise wealth in general – even earned and well deserved wealth.

How Un-American!  Some hate cronyism – so do tea parties – but fail to admit that renewables like wind are some of the worst offenders in that department.  And some just hate the idea that man benefits from fire, something cavemen discovered and we’ve been better off ever since.”

“The study committee will hopefully add a so-far-woefully-absent dimension to energy and environment policy: evaluating both the direct and indirect costs and benefits of various electricity source options, while recognizing that per unit cost of  intermittent sources of electricity cannot and should not ever be directly compared to the cost of dispatchable sources.”

“It would be really meaningful for the study committee to propose an end goal measured in PPM and cents per KWh instead of just mandating large percentages of somebody’s favorite technology and then taking their word that it will magically cure all ails.

The study committee may move us in that direction.  We are confident it will balance everyone’s desire for standard of living improvement, high employment, low rates and less wasted taxes.  Maybe these are even as important as ever cleaner air and water and ever less changing climates, considering the US is already a global leader in emissions standards.”

“This bill has the potential to raise political and public awareness of not just electricity choices, but the very closely related choices between socialism and capitalism.  The idea of ‘all of the above’ translates to ‘some of the ridiculous.’  What we need is an ‘all of the competitive’ energy policy, and Ohio has taken a small step in that direction through the passage of Am. Sub. SB 310.”

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