President Obama recently proposed spending $2 billion for the creation of 5100 green jobs. On government standards, that’s a very thrifty $392,156 per job – a bargain compared to the $2.2 million being proposed in Rhode Island and other coastal states where the only windy, rent-free space to build windmills is on the ocean.
Because building large energy generators in deep salt water is very expensive, as you could imagine, central planners must find a captive audience for their utopian experiments and they do that through contracts with energy distributors that pass the costs onto ratepayers.
The Deepwater Wind project being created in the Ocean State will force consumers to pay three to four times the market price for electricity over the next 20 years, burdening an already struggling economy with the fourth worst unemployment and fourth highest BTU rates with $390 million in above market costs.
The developers claim that the state would gain $129 million through a “multiplier” effect from the money “invested,” but the CEO of the company could only testify that the project would create six permanent jobs.
Spending $390 million to create six jobs and a $129 million returned isn’t a good deal and the project was wisely rejected by the state’s Public Utilities Commission earlier in the year exactly for this reason. But legislators sent it back for review with the added limitation that they could not balance the costs of the project against its benefits. The PUC could only consider one side of the ledger.
Toray Plastics, the states largest energy consumer, will have to spend $7.3 million in above-market costs due to this project. How many jobs will be lost to pay that bill?
Toray has invested $750 million of private capital to build a manufacturing plant that employs 600 people. Using the state’s multiplier effect, Rhode Island has also seen an additional $350 million ripple through the economy because of Toray’s investment. And they didn’t have to take a penny out of the economy to do it.
During the same week that Rhode Islanders were forced into a 24 cent per KWH contract, Vermont signed a deal with TranCanada to provide renewable energy for six cents KWH, and those wind and hydro facilities, like Toray Plastics’ plant, were created with private investments.
TransCanada has shown us that there are efficient ways to generate renewable energy. Unfortunately, on top of the ocean isn’t one of them. And as long as the government can force consumers or taxpayers to foot the bill, there will be little incentive for the innovation necessary to make it efficient.
Legal challenges to the project are underway but the larger question is how much power the government should have in controlling a market.
Testifying before the PUC, Toray’s Senior VP of Engineering and Maintenance, Shigeru Osada, said, “In a free market competitive economy laws should not attempt to specifically guarantee one company’s revenue and profits for 20 years.”
It is ironic that a man from Japan and a company from Canada are showing America how the free market works.
When the government has the ability to take your money to create a product that they also force you to buy, there won’t be much left to do short of putting everyone on the government payroll so they can afford the bill. Is that Made in America?
Bill Felkner is the founder of the Ocean State Policy Research Institute, Rhode Island’s free market think tank.