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New EPA Regulations Harm Economic Growth

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As Virginia struggles to figure out how to build a more robust economic future, employ more of our citizens in better paying jobs, and encourage those who have left the workforce to come back into it, the federal government’s regulatory drive seems to be a stumbling block to these efforts.

The Thomas Jefferson Institute just released a study that shows the impact of the Environmental Protection Agency’s newly enacted Renewable Portfolio Standards (RPS) on our state’s economy, the ability to grow new private sector jobs, and the costs on consumers. And the projections are not good. This study was written by Dr. Timothy J. Considine, Distinguished Professor of Energy Economics at the University of Wyoming, and was part of a larger study focusing on several states. The Jefferson Institute published the Virginia results separately so that our citizens and policy makers can see those impacts.

Renewable Portfolio Standards require the utilities, including those here in Virginia that provide us with our electricity, to produce specific amounts of that electricity from what are considered renewable fuels – wind and solar. In Virginia’s case we are to produce at least six percent of our electricity from renewable fuel sources by 2025. According to the study, Virginia plans to produce fully 83% of its renewable requirement from solar power and rest from wind. That means substantial investment by the utility companies will be needed to reach this goas and those costs will be passed on to the consumer in higher prices. As existing coal powered power plants that produce less expensive electricity are shut down, the cost for your light bills will increase as new, expensive solar power plants are built. This study pegs the increased electricity cost for our homes and businesses at ten percent. These increased electricity costs for business will be passed on to their customers, you and me, as well. So we will be hit from both directions with increased costs.

Our expenses will increase leaving less disposable income to be spent for savings, food, clothes, entertainment, etc. And the price for keeping the doors open at the businesses across Virginia –most employees work for smaller companies where ten percent increases in electric bills is a real hardship – will increase meaning that fewer folks will by hired and less money will be available for pay increases. When electric bills increase by ten percent, the overall economy takes a real hit.

Just as dramatic is the result on private sector employment.  According to Dr. Considine’s study, after 2020 – just three years from now – job levels will be 13-24 thousand below what they would be if the RPS standards had not been imposed.

So as our elected officials, government policy makers, business and academic leaders struggle to figure out how to encourage economic growth and wean ourselves from such a heavy reliance on federal spending, the federal government continues to impose regulations that make expanding our economy more and more difficult. In this case it deals with EPA’s newly imposed Renewable Portfolio Standards.

I understand the concerns about Global Warming although it is far from clear that these new RPS standards will have a significant impact in this area as has been clearly stated by those who have brought these new standards to us. And if we are required to build renewable energy sources to power our electricity needs, then let’s also build the infrastructure for those “cleaner energy sources” such as natural gas, nuclear power and even the “clean coal” available technology at the same time.

Meeting our future electricity needs, beyond the six percent figure imposed upon us, by relying on a dramatic increase in solar and wind is still an iffy proposition at best. As we try to figure out how to develop economically viable energy alternatives we should develop what we have and do it responsibly. For instance, bringing natural gas that is now in abundance to where it is needed; being reasonable on development of cleaner coal power plants; and finding a way to build and distribute nuclear power through smaller community based units while using new technology based procedures to keep our air and water healthy makes good sense.

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