Renewable Energy And The Green Rascal King

July 11, 2013 by  
Filed under Green Energy News

James Michael Curley in his first term as a Me...

James Michael Curley in his first term as a Member of Congress in 1912. (Photo credit: Wikipedia)

Whether or not history repeats itself, it can still be instructive.  In particular, politicians have always been able to transfer funds from the public to one’s friends have seemed to be a constant throughout history, whether it was medieval rulers offering trade monopolies to supportive noblemen, or the current panoply of tax breaks, which have turned the US tax code into a superlabyrinthine nightmare.

The trick is to prevent those who are paying for realizing it, and to make it sound like the ones getting the benefits are deserving.  Modern politicians often use the mantra of ‘jobs’ to explain nearly every action (“My vacation in the Bahamas helped support the US travel industry.”) which sounds a lot better than “these people voted for me”.  Sometimes there is a win-win, as when Obama funds infrastructure spending, badly needed in many cases, which helps the construction industry and its workers, usually not a hotbed of Republican sentiment.

The renewables industry has adopted this for its own, partly in response to the recent economic slowdown.  (A decade and more ago, the public was assured that renewables meant greater international competitiveness, a prime issue of the day.)  But also, the public has become somewhat more skeptical—for good or ill–of some claims about global warming, and less willing to sacrifice financially for greater cleanliness.

And it gets even better, as there is no cost, or so it would seem to monitor the press.  The greatest success, some would say, is the increasing reliance on mandates for utilities, requiring them to buy a certain amount of  ‘clean’ power, presumably renewable (not hydro or nuclear).  California, for example, has a 33% renewable mandate, although that is now being challenged.

Hiding such transfers is actually a time-honored practice.  The classic book, The Rascal King, about the career of James Michael Curley, the equally famous and infamous Boston Mayor in the first part of the twentieth century, describing a similar practice.  Curley agreed to a sweetheart contract with the local utility, paying at least 50% more than other cities, and in turn, the utility would offer jobs to his friends, usually constituents in need of work, not party officials looking for a sinecure.  (p. 163)

The fact that mandates are really a form of hidden subsidy is anathema to their supporters, and in Massachusetts, a contract to buy electricity from offshore windpower was set at more than double the market rate.  Expensive?  The Attorney General renegotiated a rate that was slightly lower, and described it as saving $456 million, because it was renegotiated from an earlier, even more generous contract.

As politicians hopefully move to reduce the multiplicity of tax breaks and subsidies that are distorting our economy, we should not only watch them closely to prevent them from relying more on mandates, but also encourage them to eliminate those that exist.  At the very least, consumers and taxpayers should be told the real cost of the mandates, instead of pretending that utilities are somehow absorbing them.

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