About four years ago, I included a slide in a presentation on Gov. Tom Wolf’s desire to join the Regional Greenhouse Gas Initiative, known as Reggi.
Reggi looked like economic and consumer suicide. On Oct. 3, Wolf issued an executive order commanding state Department of Environmental Protection to come up with a game plan by next summer.
Four years ago, I studied the New England states, New York and New Jersey, which were in Reggi, and I noted that in some cases, their consumer electric prices were almost double what we pay in Pennsylvania., and all were paying much higher rates than Pennsylvania.
Almost all fossil fuel power stations closed and fled New England. The New England grid became an electric power importer, meaning that it could not generate enough electricity for itself. Was Reggi responsible for this? In part, yes.
Reggi does not eliminate carbon dioxide, it simply taxes CO2 emitters so many dollars for every ton of CO2 they emit. Those power stations in New England, New York and New Jersey each just got handed an additional tax bill for tens of millions of dollars.
A business decision was made, and today there is almost zero electric generation from coal in New England, et al.
I’m not big on doomsaying, but this could happen in Pennsylvania. Coal-fired electric generation supplies 24% of the power needs on the Pennsylvania-New Jersey-Maryland Interconnect (PJM), which is our grid.
Our grid is geographically larger than the name suggests, as it encompasses parts of surrounding states. Five years ago, coal supplied more than 30% of the power. Thanks to a dynamic change in electric generation fuel sources, and an onslaught of regulations over the past 12 years, it has been lights-out for the coal-fired power industry.
PJM is a net-exporter of electricity; we make enough for ourselves and sell power to other grids. That helps keep our power costs lower. New England is a net-importer of electricity and even buys power from a foreign country, Canada.
It makes sense geographically, but what if the long honeymoon with Canada was suddenly over?
If Pennsylvania does join the rest of the happy campers to our east and northeast, it’s going to cost the commonwealth’s emitters of CO2 big time. Many of those emitters are going to cease to do business in Pennsylvania.
In 1994, there were just under 1,000 facilities in Pennsylvania that were air pollution “sources.”
Today, there are under 500.
Reggi will chip away at these companies, and I think an alarming number of them will go upside down financially.
So where will they go?
Anywhere where the rules are different than the northeast.
They’ll go to Florida, or “New York/New Jersey-South” as I like to refer to it.
There has been a huge outmigration of people and businesses from the northeast states.
Why? For starters, some of those states don’t have state taxes.
Pennsylvania already collects approximately $20 million every year from businesses for air pollution emission fees. Last year, Pennsylvania raised fees for “other” air pollution regulation costs, permit fees, review fees, renewal fees, etc.
Reggi would result in an additional $250 to $400 million in fees going to the state government.
Businesses and industry – the less-than 500 “survivors” in Pennsylvania – are going to have to cough up more than $250 million a year under Reggi.
The consumers are going to pay for this, because the government does not generate revenue. It collects taxes and fees from us, and then redistributes it.
In conclusion, Reggi in Pennsylvania will result in power stations and businesses closing, and our grid will come close to becoming an importer of electricity.
If Pennsylvania continues this New York/New Jersey-esque quest to tax everything, there’s going to be more Steelers, Eagles, Panthers and Nittany Lions fans living in the south than in the Keystone State.