Economics in O’Malleystan

The Baltimore Sun:

Gov. Martin O’Malley’s energy administration will release sweeping legislative and policy recommendations today that include new power-conservation laws, an estimated $100 million fund for environment-friendly initiatives and an emphasis on consumer responsibility for electricity consumption.

O’Malley, a Democrat who campaigned on the unfulfilled promise of undoing a 72 percent electricity rate increase for 1.2 million Baltimore Gas & Electric customers, appears likely to pursue an agenda in Annapolis that could further increase consumer costs in the short term. But administration officials say the proposals are needed to ensure long-term sustainability of Maryland’s faltering power network and forestall the threat of blackouts as early as 2011.

I have to give the O’Malley people credit. Somehow they were able to convince a credulous reporter that this was news and not parody.

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Key items:

Creating a “strategic energy investment fund” paid for by electricity companies that would invest in energy-efficient technologies and promote nonpolluting power alternatives.

Where do we think the “electricity companies” would be getting the money for this “investment.” As I don’t see guys in Allegheny Power uniforms (I’m willing to bet the same holds true in areas served by BG&E) working nights at Taco Bell and pooling their money to “invest” in “energy-efficient technologies” I’m going to go out on a limb here and predict that you and me, Mr. and Mrs. Rate Payer, will be “investing” our collective butts off.

Asking lawmakers to pass a bill codifying Maryland’s goal of reducing overall electricity consumption by 15 percent by 2015, based on 2007 usage.

Subjecting the law of supply and demand to legislative fiat is an interesting concept, to be sure. The odds of it working are pretty slim. So what do you think the strategy will be to try to make this happen? Could it involve rate increases?

Requiring the state’s utility companies to buy 20 percent of their power from wind, solar or other renewable sources by 2022 – and doubling the penalties for companies that do not.

According to the Energy Information Administration renewable energy, which includes biomass, comprises 7% of US energy consumption. The favored generating means, wind (favored by Democrats anywhere they don’t live with the windmills) and solar comprise 5% of this 7%. The odds of Maryland’s very own little law jumpstarting a profoundly unprofitable means of energy generation is very slim. And when the fines kick in, who will pay them? As a hint, the electric utilities are guaranteed a profit.

This law is a sham. It is no greater sham than the “structural deficit” but it is a sham. Based on what we saw in the special session the Republican caucus will be bought piecemeal by the administration for the sake of special favors to their districts and vote for another feel good raid on our wallets.

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