DV Journal

Pennsylvania is a step closer to exiting the Regional Greenhouse Gas Initiative (RGGI). A bill repealing the carbon tax portion of RGGI passed the state Senate by a 27 to 22 vote on Tuesday.

“It is time to repeal this regulation and focus on putting forth commonsense, environmentally responsible energy policy that recognizes and champions Pennsylvania as an energy producer,” said Sen. Gene Yaw (R-Bradford).

In 2019, then-Gov. Tom Wolf (D) refused to take the question of RGGI membership to the GOP-controlled legislature, instead issuing an executive order putting the state in the compact. Critics of Wolf’s actions said it was both bad for Pennsylvania ratepayers and undermined the democratic process.

RGGI requires fossil fuel power plants with capacity greater than 25 megawatts to obtain an allowance for each ton of carbon dioxide they emit annually. Power plants within the region may comply by purchasing allowances from quarterly auctions, other generators within the region, or offset projects. The costs of those allowances are passed on to ratepayers.

Various Commonwealth Court rulings prevented Pennsylvania from implementing Wolf’s unilateral action. Last November, justices called it an “invalid tax” because the state legislature never passed a bill that authorized RGGI. An appeal before the state Supreme Court is pending.

The RGGI program was so unpopular in Pennsylvania that Democratic Gov. Josh Shapiro avoided taking a stance on it during his 2022 campaign. He attempted an end-around RGGI this spring by proposing an alternative, the Pennsylvania Climate Emissions Reduction Act (PACER). That would have created a cap-and-trade program run by Pennsylvania regulators. No hearings were ever held and the PACER proposal is believed dead.

RGGI could suffer a similar fate if the Democratic-controlled state House approves the carbon tax repeal.

Sen. Kim Ward (R-Westmoreland) pushed Democrats, including Shapiro, to support the RGGI repeal. She said Pennsylvania would see electricity bills rise 30 percent and see 22,000 jobs lost if RGGI ever became law.

“Our focus should be on unleashing our commonwealth’s energy potential to strengthen Pennsylvania’s economy now and for the future,” she said.

House Republicans agree. During a Policy Committee meeting on Tuesday, members heard testimony from energy executives and advocates who said the state’s convoluted permitting structure caused it to lose out on business.

While the Keystone State produces about 30 percent of the electricity for the PJM power grid it could be much higher, according to Jeff Nobers of Pittsburgh Works Together. The group is a coalition of labor and business executives focused on the economy. The PJM grid covers Pennsylvania and 12 other states plus Washington, D.C.

He put the blame on state and federal regulations. Nobers argued the current rules tangle together and run at cross purposes. That caused growth to stall. “We need to develop a rational, realistic, data-driven comprehensive policy that accounts for the constraints of the real world,” he said.

Energy executives complained Pennsylvania’s current permitting structure hampered development. Michael Hillebrand, president and CEO of Huntley & Huntley told the committee it takes years for companies to go through the permitting process. He said in Texas, the nation’s top natural gas producer, it takes about a week for the permitting process to be finalized.

“Every Mission: Impossible goal that [Pennsylvania] could put on top of it to mess it up, we have done,” lamented Hillebrand.

Last year, Shapiro signed an executive order he said would modernize the permit application effort.

But Rep. Josh Kail (R-Beaver) said Shapiro had the power to do more through another executive order. “It’s his mess,” he said.

Kail urged Shapiro to tell state agencies to approve permits within 30 days or people would lose their jobs. He pointed to a hearing held last year where the Pennsylvania Department of Transportation complained about the state Department of Environmental Protection permitting process.

“We recognize that it is a serious problem and it will be a top agenda item once we retake the majority (in the House after the November election),” he promised.

Shapiro spokesperson Manuel Bonder told DVJournal the governor wants to protect and create clean energy jobs and address climate change.

“The governor has made clear that inaction on this key issue is not an option, and instead of wasting time on messaging bills, his administration will remain focused on actual solutions and delivering real results for Pennsylvania communities,” said Bonder.

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Pennsylvania voters are increasingly concerned about rising energy costs. According to recent polling, 80 percent of Pennsylvanians say their utility bills have climbed over the past two years, with 34 percent saying their bills jumped “a lot.”

Yet, the experience of other states shows Gov. Josh Shapiro’s preferred policies practically guarantee increased electricity prices.

Currently, Pennsylvania’s electricity prices are in the middle of the pack. A report by the American Legislative Exchange Council (ALEC) found the commonwealth’s average price is 9.97 cents/kilowatt-hour—the 26th most expensive. ALEC based its state rankings on a weighted average electricity price drawn from the rates of four sectors: residential, industrial, commercial, and transportation.

Most of Pennsylvania’s neighboring states—including New York, New Jersey, Delaware, and Maryland, plus all six of the New England states—have higher energy prices. Obvious reasons exist for Pennsylvania’s favorable pricing position in the region. For one thing, the Keystone State has abundant coal and gas and substantial nuclear power assets, generating enough surplus electricity to make Pennsylvania the country’s top kilowatts exporter.

However, the ALEC report points to another reason: The 10 northeastern and Mid-Atlantic states with higher prices than Pennsylvania all have Renewable Portfolio Standards (RPS) and a carbon tax imposed through the multi-state Regional Greenhouse Gas Initiative (RGGI).

Californians pay the highest electricity prices at 19.65 cents, followed by Massachusetts, Rhode Island, Connecticut, and New Hampshire. And all these states impose a carbon tax and RPS mandates.

“In contrast, the three states with the lowest electricity prices—Idaho, Wyoming, and Utah—avoid RPS mandates and cap-and-trade programs,” the report notes. Idaho’s rate of 8.17 cents is the lowest in the country.

Last year, the Commonwealth Court blocked Pennsylvania’s entry into RGGI. Also, Pennsylvania’s current RPS, so far, requires alternative energy sources to comprise a relatively modest 18 percent of electricity sales. Eschewing RGGI and keeping uneconomical energy to a minimum will keep prices lower.

Unfortunately, Shapiro displays more tenacity than good sense with his recently unleashed bevy of bad policies. The governor appealed the judicial block of RGGI, called for the enactment of Pennsylvania’s version of a carbon tax, and proposed to more than double its mandate for the kind of energy that customers must buy.

Any one of these attempts at energy policy by the governor will hit consumer pocketbooks hard, according to the relationship shown between electricity prices and government mandates in the ALEC report.

“Previous data showed that states could have up to an 11 percent increase in electricity costs due to the implementation of an RPS alone,” said ALEC.

The report continues: “In the 48 contiguous states, the 16 with the highest electricity prices all have an RPS in place, as do 18 of the highest-priced 20 states. Similarly, with the exception of Virginia, each of the states in the RGGI or another cap-and-trade program is within the 15 states with the highest prices of electricity.”

Two adjacent border states, Ohio and West Virginia, boast lower electricity prices. As does Pennsylvania, these states have substantial energy resources. Moreover, neither has a carbon tax, and only Ohio mandates RPS. Yet, sadly, Shapiro prefers the paths of the high-cost states, like California and New York, over those taken by Pennsylvania’s two growing neighbors.

Shapiro’s penchant for forcing energy choices on customers and taxing energy producers threatens further harm to Pennsylvania families and businesses already burdened by high taxes and the effects of inflation.

And the governor’s timing couldn’t be worse. This spring, electric distribution utilities that serve 56 counties have requested a major rate increase, varying from 28 to 43 percent. Layering a new carbon tax on top of rate hikes would be especially challenging for Pennsylvania households and businesses.

A better approach would offer consumers choices among energy options and allow producers to operate responsibly without the government favoring one competitor over another.

Moreover, increased competition and supply—enabled by more pipelines—and a streamlined regulatory framework focusing on grid reliability (rather than arbitrary quotas) could reduce both the burden of utility bills and the threat of power blackouts. Both are worries Pennsylvanians could do without.

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State Sen. Gene Yaw has filed legislation to repeal the Regional Greenhouse Gas Initiative (RGGI) carbon tax.

Former Gov. Tom Wolf (D) signed an executive order in 2019 to bring the state into RGGI, a move the state legislature previously rejected. According to Yaw, RGGI, a multi-state compact, would increase consumer electricity rates while cutting energy and manufacturing jobs and lead to the closure of Pennsylvania power plants.

In a memo circulated to Senate members, Yaw said Senate Bill 1058 would repeal a CO2 Budget Trading program regulation promulgated by the Department of Environmental Protection (DEP) and the Environmental Quality Board (EQB) despite bipartisan objection from the General Assembly.

“For four years, Pennsylvania taxpayers have footed the bill for this unconstitutional, unilateral decision,” said Yaw (R-Bradford). “RGGI is wrong for Pennsylvania, and it is time to repeal this regulation and focus on putting forth commonsense, environmentally responsible energy policy that recognizes and champions Pennsylvania as an energy producer.”

Last year, the Commonwealth Court ruled Pennsylvania’s entrance into RGGI may only be achieved through legislation duly enacted by the General Assembly, not merely through rulemaking promulgated by DEP and EQB. That ruling has been appealed to the Pennsylvania Supreme Court by Gov. Josh Shapiro (D), and the appeal remains pending. In the past, legislation preventing Pennsylvania from unconstitutionally being entered into RGGI has received bipartisan support.

Perhaps to appear moderate while campaigning for governor, Shapiro did not back RGGI and refused to call for an end to fracking. Now that he is in office, he is fighting in court to uphold his predecessor’s action. Shapiro justified his decision to appeal the Commonwealth Court RGGI ruling as a defense of executive authority.

But other states that are part of RGGI—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia—joined with legislative approval rather than executive fiat.

According to the nonpartisan Independent Fiscal Office, RGGI could cost Pennsylvanians more than $663 million per year. The Department of Environmental Protection estimate put the number tens of millions of dollars higher, at $688 million.

Virginia, which Republican Gov. Glenn Younkin leads, is trying to leave RGGI. However, Democratic legislators oppose the withdrawal, and the Association of Energy Conservation Professionals has filed a lawsuit to block it.

Yaw said this legislation comes after a series of hearings with members of the Ohio General Assembly to discuss PJM and the reliability of the mid-Atlantic power grid it manages. PJM projects 20 percent of its existing capacity will retire between now and 2030. That would leave it without sufficient power to meet the demands of consumers.

Yaw added thermal generation retirements, like the recently announced Brandon Shores power plant closure in Maryland, coupled with the threat of RGGI, only further compromise the integrity of the electric grid. One Federal Energy Regulatory Commissioner (FERC) recently said the shutdown could cause a “potentially catastrophic” scenario. However, a recent FERC order shows concerns about the outlook of the region’s power production are being heard.

“Not only would RGGI leave thousands struggling to pay their utility bills during a time of record inflation, but it would also have a detrimental impact on the reliability of our region’s already strained electric grid,” Yaw said. “There is more work to be done, but this legislation is an important component to ensuring energy reliability, sustainability, and affordability for Pennsylvania families and businesses.”

The other RGGI member states are not energy-producing states. Pennsylvania has the highest production of natural gas after Texas. And fossil fuels here fund 424,000 jobs.

The threat of RGGI in Pennsylvania has driven fossil fuel plants out of existence, halted the construction of new natural gas power plants, and handcuffed businesses from making further investments with an uncertain regulatory future, according to Yaw. When this generation is retired by states with “clean energy goals,” the new generation cannot keep pace with the former plants.

The ongoing energy transition has had a detrimental impact on the reliability of Pennsylvania’s electric grid, making blackouts and restrictions on when and how residents and companies can use electricity inevitable, he noted.

Carl A. Marrara, executive director of the Pennsylvania Manufacturers’ Association, commended Yaw and the Senate for “tackling this important issue.”

“Senate Bill 1058 is necessary legislation to remove the unconstitutional mess, in the form of a $500 million energy tax, that the Wolf administration unilaterally imposed upon Pennsylvania’s ratepayers,” said Marrara. The Commonwealth Court’s decision last year clearly stated that RGGI is a tax and that, per the Constitution of Pennsylvania, taxation authority is granted solely to the legislature. Repealing RGGI will allow the General Assembly and Gov. Shaprio to debate and implement energy policies that make actual sense for our commonwealth.”

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Energy sector officials have been warning for years about the risks posed to New England’s grid by plunging temperatures, risks exacerbated by anti-energy-infrastructure policies across the region.

Now with New England facing its coldest temperatures since the “polar vortex” of 2019 and wind chills of -45 degrees below zero across the U.S. northern tier states, the grid is under stress once again.

“Well-documented natural gas pipeline constraints, coupled with global supply chain issues related to deliveries of oil and liquefied natural gas (LNG), are placing New England’s power system at heightened risk heading into the winter season,” ISO New England Inc, operator of the region’s power grid said in a December 6 statement.

In that same statement, Peter Brandien, vice president of System Operations & Market Administration, warned “if the region experiences an extended period of extreme cold weather, fuel supplies into the region could become constrained resulting in challenging system operation.”

As ISO=NE continues its work with the New England states and industry stakeholders to transition to what it considers a cleaner grid, the organization said it must also maintain real-time power system reliability.

“In recent years, oil and LNG have filled the gaps when extended periods of very cold weather have constrained natural gas pipeline supplies,” according to ISO New England’s president and CEO Gordon van Welie. “Higher prices globally for these fuels, as well as pandemic-related supply chain challenges, could limit their availability in New England if needed to produce electricity this winter.

“The region would be in a precarious position if an extended cold snap were to develop and these fuels were not available,” van Welie said.

Dan Kish of the Washington, D.C.-based Institute for Energy Research (IER) says these warnings were not sexy at the time, but people are paying attention now.

“What they pointed to was a growing gap between demand for energy and the supply that people are making available either through pipelines or electrical lines or anything else and because New England is an area of the country that does not have a lot of energy production,” says Kish. “I would be concerned based upon what the people who oversee the grid have said about it.”

“Part of the problem with the grid is the problems created by people that say we need to fix the grid,” says Kish. “The more diversity one has, the more options people have to use whatever fits those needs, and when you begin closing those down, that puts excessive strain on the grid, and that’s why the grid is running into trouble.”

Which is why New Hampshire maintains the 459 MW Merrimack Station in Bow, the last coal-burning power plant in New England. While it is seldom powered up, its owners, Granite Shore Power, make millions in capacity payments by acting as a reliable electricity backup for the grid.

“Coal-fired plants no longer supply baseload power,” says the U.S. Energy Information Administration, “but they play an important role in providing electricity on high demand days.”

Green activists have been trying unsuccessfully to shut down the Bow plant for years. Four protesters with the left-wing organization “No Coal, No Gas” were arrested Saturday after two chained themselves to a smokestack at the Bow plant.

None of the four arrested are residents of New Hampshire, according to police reports.

So, what power source should New England use during high-demand periods if they succeeded in getting Bow shut down?

“I recognize that the transition does not happen in one day, and the workers at the coal plant deserve options in the transition away from fossil fuels,” Rebecca Beaulieu, Communications & Youth Programs Organizer at 350 New Hampshire.

Beaulieu argues that coal provides just 3 percent or so of New England’s power, even during a peak in usage, and that three percent can be made up by renewables. “We would love to see the coal plant replaced with solar or wind energy – something that would benefit the residents of Bow and end the pollution of their air and water.”

And she’s right: On. Tuesday, ISO-NE reported just 2.55 percent of power on the grid came from coal. However, that’s about the same as wind (2.9 percent) and 100 times more than solar (o.o2 percent.) Wind and solar output would have to double to replace coal — and that’s assuming there’s not another 2019.

“Wind and solar operate pretty poorly when it’s cold or snowing,” says Kish.

Meanwhile, the use of oil surges during cold periods like this one. According to the dashboard, New England was getting 17 percent of its energy from oil on Tuesday, more than hydro/wind/solar combined.

One of the stated goals of the “No Coal, No Gas” movement is to prevent the Bow plant from being converted to natural gas – despite the fact it emits about half as much carbon as coal.

“Europe right now has been going through a situation where they’re closing industries because you simply can’t make fertilizers or metal, or steel because the cost of energy has gone through the roof because they’re a few years ahead of us in this so-called green transition,” Kish said.

“So, make no mistake about it: The grid itself is actually put in peril by many of the things that they’re preaching that we ought to adopt.”

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