The Administration’s wind generation legislation, the Maryland Offshore Wind Energy Act, is a case study in the doctrine of government economic planning. Eager to appear on the leading edge of developing alternative energy, the measure was crafted with no regard to the American economic system of free markets. It is not only the philosophical argument that concerns Maryland Business for Responsive Government: the legislation does not address key business details and raises consumers’ utility rates to finance a political objective.
What may explain the need for government intervention is that the Administration appears to doubt the market potential for wind power. In 2007, the Maryland Public Service Commission paid a consultant more than $2 million to report on future energy options. The report concluded that off shore wind was the most expensive form of energy. The legislation avoids economic reality by forcing utilities to sign long-term purchasing contracts. Forcing one party to sign a contract means it’s not a good deal for someone.
The law would force the state’s investor owned utilities to purchase wind power for 25 years from select firms. This would then lead to the construction of wind turbines approximately a dozen miles from Ocean City. Government agencies select which firms are awarded offshore leases, set profit margins and spell out terms and conditions of contracts.
Then there is the question of the impact on rate payers. Costs would be spread among Maryland electric customers as monthly surcharges. The Governor proposed March 23 a $2 per month ceiling in year one as the proposal would take effect. That changed a week later to a $2.00 cap throughout the length of the contracts to appease reluctant lawmakers. Consumers who bear these costs are unlikely to discern that higher electric bills are driven by government policy.
Yet another consideration is wind generation compared to solar, bio-fuels or technologies still being developed. All of these are virtually shut out of the market when Allegheny Power, Baltimore Gas and Electric Co., Delmarva Power, and Pepco are forced into long-term contracts. Utilities say this would reduce private investment in wind, solar and energy efficiency technologies.
Finally, there doesn’t appear to be a firewall between firms with political connections and the government agencies calling the shots. Press reports documenting the political influence of some firms raises questions about what is driving the agenda and the sudden urgency to erect a giant wind farm.
There is a way to develop alternative energy without picking winners and losers and financing it on the backs of residential and commercial utility customers. Dismissing the role of free markets in alternative energy stifles further innovation and amounts to a multi-billion dollar gamble that government knows best how to manage energy production.
For those interested in hearing more on this issue, MBRG President Kimberly Burns will be live on WQMR’s, Q 101 FM, “Power Talk” show on April 5 at 9:25 a.m.
(Sauerbrey and Mandel are co-chairs of Maryland Business for Responsive Government. They may be reached at email@example.com.)
Contractors Thankful They Can Express Views
Well, we’ve had a history lesson, a school bus safety lesson and now Mr. Rothermel apparently needs a school bus business lesson.
As Mr. Rothermel so aptly states, there is much more to the story. He is obviously stuck on the word “may” as it relates to school bus useful life. He “may” operate his personal motor vehicle on Maryland roads as long as it meets all state requirements.
According to my old Webster’s College Dictionary, may means have ability to; can have permission to; used in auxiliary function to express or wish or desires (long may he reign); used in auxiliary function expressing purpose or expectation (I laugh that I may not weep); and shall or must, used in law where the sense, purpose or policy requires this interpretation.
Obviously, the definition used in this context is the last one.
Mr. Rothermel still also writes about an extension. After 10 years of buses being legal of r15 years use, I would no longer refer to this as an extension, but as the “normal” service life of a school bus.
Mr. Rothermel claims that no one is forcing contractors to enter into an agreement. While this is technically correct, the contractors feel that in actuality what Mr. Rothermel is saying is to take whatever I feel like giving you or you can lose your livelihood.
Using Mr. Rothermel’s contract figure of $63,595, I would say that this is a bargain for the county. Few businesses in Worcester County can survive with yearly receipts of $63,595. When you subtract $27,600 for new bus payments, $9,900 for diesel fuel, $18,956 for the county’s available health insurance family plan, $3,215 average yearly maintenance costs, there isn’t much left for the take-home pay. Add to these costs bus rentals, substitute drivers, breakdowns and self-employment taxes. Another requirement is workmen’s compensation insurance.
Anything found on inspections, such as damaged seats, interior or outside damages done by unruly students, is required to be paid for by the contractor. Sometimes this is reimbursed, usually it is not.
Basically, the contractors are working for the first five years of the life of a bus for very little or no money. After the bus is paid for, the contractor can then make about $25,000 until another new bus is required.
Obviously, it’s in the interest of both the contractor and the Board of Education to run buses the full allowable 15 years. These buses safe the Board of Education an average of $7,000 per year per bus. The amount being saved on 12 through 15-year buses is over $100,000 this school year.
Mr. Rothermel states that he is uncertain if I advocate the contractors becoming employees of the Board. While this has not been discussed at any Association meeting, I feel that some would welcome that designation. I don’t believe that under the IRS rules that with the close daily and hourly supervision of the contractors, if investigated, the Board of Education could continue to designate us as contractors.
While I did suggest to the Superintendent that the Board buy the buses and hire us to drive, I must admit that I knew that there would be no way the county could even come close to being able to afford to do it. Indeed, if the buses were donated, the Board couldn’t afford the costs to run them.
Mr. Rothermel states that he doesn’t think that these discussions should be aired in the newspaper where both parties have an equal opportunity to state their views. He would rather have them discussed where he has more control over how much is said, when it is said and what is said.
Several contractors have already gone through the proper channels to try to discuss these problems, but have been met with an attitude of confrontation and elitism rather than an open two-sided discussion.
Thank goodness for the First Amendment and The Dispatch graciously letting the contractors publicly discuss some of our grievances.
(The writer is the president of the Worcester County Bus Contractors Association.)
Taxpayers Should Not Fund Wind Experiment
In reference to the recent contrasting views of offshore energy, I believe that Mr. McDermott gave a concise, clear reason for why the government, other energy companies or the taxpayer should not have to be required to pay for this experiment.
If Beowulf Energy feels so strongly that its product will effectively help reduce the cost of energy while providing a clean energy source, let them acquire private investors to help back their endeavor. We, the taxpayers, should not be required to pay for what the governor, Senator Mathias, Delegate Conway or Mrs. Phillips thinks is a good thing based on the Maryland Energy Administrations estimates.
If anything, their statistics should be questioned because their estimates can be as equally dubious as any supplied by the oil or coal industries. Let the free market approach determine feasibility, not the taxpayer.
Paul St. Andre’
Cost Of Living Rising
In case anyone hasn’t kept vigil on our State of Maryland, Worcester County and Ocean City, it’s getting pricey to live here.
Let’s skip the state and county for now and look at Ocean City.
It now costs $3 for an all-day bus pass (okay, I admit to a senior pass).
Suddenly we have Joanne Throwe, director of the University of Maryland Environmental Finance Center, (emphasis on the last three words) suggesting (demanding?) a fee to deal with storm water that empties into the bay.
I read in our local newspapers a $2 to $5 preliminary fee per month for residential property owners. Commercial owners would pay a preliminary fee per 2,500 square feet of lot area with an unstated maximum cap built into the system.
Reminds me during this Holy Season of Lent of Tim Rice, Andrew Lloyd Webber and their “Jesus Christ Super Star.” Caiaphas the High Priest sings to Judas Iscariot that the money is “a fee nothing; fee nothing, fee nothing more.”
Yep, just a fee. No matter how it comes, and it will, it’s only a “fee nothing more.”
And just a preliminary fee.