Frank Kratovil vs. The US Energy Information Administration

Last month I wrote about Frank Kratovil’s four-page missive to constituents defending his irresponsible vote for the Waxman-Markey cap and trade bill. In that post I explained Kratovil’s twin deceptions that cap and trade does not increase taxes and that “Maryland families would end up saving $8 per month.”

Kratovil writes that Waxman-Markey “does not increase taxes whatsoever.” While this is technically true, it is a classic case of distinction without a difference. What Waxman-Markey does is impose massive regulatory costs, which act like taxes—massive taxes.

I used the Heritage Foundation’s by-congressional district analysis of the show the negative economic impacts. Apparently that wasn’t good enough for some. So here is the judgment of non-partisan/policy neutral US Energy Information Administration.

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“ACESA increases the cost of using energy, which reduces real economic output, reduces purchasing power, and lowers aggregate demand for goods and services. The result is that projected real gross domestic product (GDP)”

Furthermore, the report states that cap and trade “increases energy prices, but effects on electricity and natural gas bills of consumers are substantially mitigated through 2025 by the allocation of free allowances to regulated electricity and natural gas distribution companies.”
While this might seem to bolster Kratovi’ls defense and the claims of cap and trade proponents, in reality it doesn’t when you account for two other factors.

  • The report notes that “electricity prices in five of the six main ACESA cases range from 9.5 to 9.6 cents per kilowatthour in 2020, only 3 to 4 percent above the Reference Case level.6 Average impacts on electricity prices in 2030 are projected to be substantially greater, reflecting both higher allowance prices and the phase-out of the free allocation of allowances to distributors between 2025 and 2030. By 2030, electricity prices in the ACESA Basic Case are 12.0 cents per kilowatthour, 19 percent above the Reference Case level, with a wider band of 11.1 cents to 17.8 cents (10 to 77 percent above the Reference Case level) across all six main policy cases.” I checked the current SOS per kwh rates for BGE, PEPCO, and Delmarva Power, respectively they are 12.245 cents, 12.51 cents, and 11.28 cents. Maryland rates are already at or above the rates in the various EIA cases. Given what the bill is designed to do—raise electricity prices—Marylanders are going to see substantial rate increases that will dwarf the pittance RGGI rebate. Also, don’t forget the green technocrats in the Maryland Department of the Environment are busy brewing their own cap and trade scheme, which will pile on to the energy burden Maryland families already face.
  • The built-in allowances for utilities also undermine the ostensible purpose of the bill, which is to lower GHG emissions. This is Achilles Heel of GHG reduction schemes. They provide subsidies that favor renewable energy interests, but don’t do anything to reduce GHG emissions or have any effect on global temperature.

Much like his double talk on healthcare watch Kratovil talk out of both sides of his mouth on cap and trade and energy.

Just because John McCain pushed cap and trade doesn’t make it right nor is it an argument for supporting it. In fact, cap and trade was a major disagreement between McCain and conservatives.

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