- - Friday, June 20, 2014

ANALYSIS/OPINION:

Earlier this month, the Obama administration offered its latest and best thoughts on how to rearrange the American economy — and bring yet another part of it firmly under the control of the federal government.

This time the target is the energy industry. Under the guise of addressing global warming, President Obama’s Environmental Protection Agency (EPA) has proposed a plan that would require all states to make drastic reductions in carbon-dioxide emissions, forcing them to use less coal and effectively mandating a transition to more expensive and less reliable wind and solar energy, regardless of cost or effectiveness.

Through the regulatory power of the EPA, the administration is attempting a hostile takeover of the electricity sector that should be resisted by all who care about a thriving economy and believe in a balance of power between federal and state governments.

The rule as proposed will burden the economy, eliminate jobs and raise the utility bills of families and businesses — hitting the poor, the elderly and those on fixed incomes the hardest at a time when they can least afford it. More broadly, it will shrink the role of states in regulating and coordinating their electricity system and lead to an unprecedented expansion in the size and power of the federal government.

In order to successfully resist these regulations, a few points must be emphasized.

First, it is critical that states understand they themselves are the real targets. The energy producers will experience some discomfort, but the rule is designed to help them shift costs along to their customers. At risk is the states’ ability to regulate their generation, to ensure reliability, to use native resources and to adapt to economic and demographic change. The rule as proposed is the most egregious example of federal micromanagement of an economic sector in our lifetimes.

We need to bring the states — whether blue, red or purple — together in a coalition to resist. State legislators, public utility commissioners and local environmental agencies need to make it clear that the states, not the federal government, possess the proper authority to regulate and provide for the energy needs of their residents.

One must also consider the fact that the EPA should not be allowed to write federal implementation plans for each state. As painfully demonstrated by the failing Obamacare health care exchanges, the federal government simply does not have the resources or ability to create or execute such plans. Not only does the federal government lack the ability to execute, it has consistently demonstrated that it is not in a position to know what is best for each state. As with Obamacare, the federal government is counting on states to be a willing accomplice and facilitate the takeover of their energy industry.

The second point in resistance is that Congress needs to act, or in this case, not act. The simple reality is that the current configuration of Congress limits what can be accomplished. Next January, the appropriations process may be the battlefield of choice, but for now, the ability of Congress to block the president’s latest power grab is suspect at best.

All legislative action regarding the proposed rule should be measured against a simple test: Does it facilitate and encourage the federal takeover of the electricity sector or does it empower the states to maintain their authority?

One immediate way that measurement will come into play — and an area where Congress could complicate efforts to beat back the rule — is the pending extension of the taxpayer subsidy for wind power, known in Washington-speak as the Wind Production Tax Credit, or PTC. Measured against our test, it is obvious that the appropriate action for Congress is to vote against the extension. Clearly, extending the misguided federal wind subsidy will help the Obama administration execute the takeover.

Subsidizing wind power is a fundamentally bad idea, but it also makes life more expensive. Ratepayers from states with renewable-portfolio mandates pay on average 20 percent more for electricity than residents from states without such mandates. The goal of Mr. Obama’s proposed rule is to force all states to adopt such mandates. In effect, this will increase their electricity costs so they are on the same level as states that have already accepted green-energy mandates.

One problem that several states are seeing is that they cannot comply with their own laws without extending the federal wind subsidy. If the subsidy is not extended, most states will be forced to repeal or reduce their own mandates, thereby lowering costs to consumers. They would then have to look to clean coal, natural gas or nuclear power to meet their compliance goals under the president’s climate plan.

This option would ultimately benefit ratepayers and the broader economy, and would serve as clear notice that Congress and the states do not intend to allow the administration to move forward with its takeover of the electricity sector.

Tim Phillips is the president of Americans for Prosperity.

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