Energy legislation draining small businesses

Karen Kerrigan Contributor
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Health care reform has been receiving all the headlines, yet Americans must stay informed of other measures moving through Congress, too. The U.S. Senate is currently debating climate-change legislation—an initiative that will cripple many small businesses. The legislation will increase utility bills and gas prices, creating additional burdens that consumers and small-business owners cannot bear during this tough economic period.

For small businesses—the engines of job creation and economic growth—the higher costs imposed by the legislation will lead to job loss, anemic investment and lower sales. The U.S. economy is counting on smaller enterprises to lead our nation out of recession. The climate bill imposes more costs on the entrepreneurial sector when Congress needs to be throwing us a lifeline.

The U.S. House of Representatives passed the American Clean Energy and Security Act by a thin margin, and the U.S. Senate is currently considering similar legislation. One provision of serious concern for small businesses is the renewable energy standards (RES) mandate, which requires a minimum percentage of energy to come from sources deemed “renewable” by bureaucrats in Washington.

Unfortunately, overreaching federal policies—like a federal RES—fail to take into account the diversity of resources enjoyed by the vastly dissimilar regions and states in our nation. By taking a “cookie-cutter approach” to energy policy, states that are unable to produce the “correct” sources of energy will be forced to purchase energy credits from the lucky states with access to such resources on the government’s stringent list.

Of course, these credits will be expensive and the utility companies will ultimately pass the higher electricity costs onto consumers. According to a recent study by the National Black Chamber of Commerce, the legislation could cause retail electricity rates to rise 12 percent by 2015 and 24 percent by 2030. These increases will cause the average U.S. electricity bill to increase as much as 5 percent in the 2020-2025 time period, and increase even more dramatically post-2025. In short, small-business owners will be on the receiving end of these higher costs. Energy-intensive small businesses will get more severely walloped.

To make matters worse, gas prices will also soar. The NBCC study reported that prices could rise by as much as 19 cents per gallon by 2015 and 38 cents per gallon by 2030 if the legislation were enacted. The Heritage Foundation and the National Association of Manufacturers found similar results in their comprehensive studies of the legislation. Business owners who rely on gasoline to fuel cars and trucks will be disproportionately hit by the costly effects of the bill.

All three studies reported that the legislation could cause 2 million or more jobs to be lost by 2030. With unemployment now more than 10 percent, the job market cannot take such a hit.

Small businesses cannot afford policies that impose higher cost on their firms. Costly and counterproductive mandates like the federal RES will be a permanent drag on our economy and U.S. competitiveness. With many small businesses already struggling with high costs and tight profit margins, our elected officials need to be focusing on policies that relieve them of their burdens. They need to focus on initiatives that encourage investment and job creation. The stringent and costly RES mandate fails on all counts.

Karen Kerrigan is president and CEO of the Small Business & Entrepreneurship Council.