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Business, Free Enterprise and Constitutional Issues; Pro-Life and Pro Second Amendment. Susan Lynn is a member of the Tennessee General Assembly. She serves as Chairman of the Consumer and Human Resources subcommittee, a member of the Finance Ways and Means Committee and the Ethics Committee. She holds a BS in economics and a minor in history.

Sunday, May 03, 2009

Brushing up on energy schemes

There are several energy schemes with which we need to acquaint ourselves because of their potential damage to our pocketbooks.

Just imagine the suffering your family and your budget would face if they were all put into effect.

Legislation in the federal and state government is trying to accomplish this right now.

They are plans that violate good business ethics and economic fairness. We need to be aware of these schemes and the damage they will do. Sadly, our own American government is trying to impose them.

Renewable Portfolio Standards
Require increased production of energy from renewable sources. These sources are not necessarily less expensive or more efficient than other sources.

RES Credit Trading Programs
Renewable energy credits are tradable environmental commodities which represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource1. Many power generating companies don't or can't readily use renewable sources of energy to produce power for their customers. Therefore, under this scheme, they will have to purchase the credits from power companies that do use renewable sources so that they can prove to the federal government that renewable sources were used. Obviously, this added cost whose only legitimate effect is to make power more expensive for customers.

Cap & Trade
Is a regulatory scheme used to control pollution by placing a cap on large manufacturers’ emissions. Should they stay under their assigned cap they can trade (or sell) the unused portion of their cap to another manufacturer that has exceeded their assigned cap. This does virtually nothing to decrease pollution, or encourage increased production, but it obviously increases manufacturing costs.

Decoupling Mechanisms
Refers to the disassociation of a utility's profits from the actual volume of a customers' usage. Instead a given rate of return is aligned with revenue targets; rates are annually adjusted based on these targets. The point is to disconnect the utility's desire for net revenue from sales volume. Most customers expect to be charged for the volume of fuel they use, plus average fixed costs and a fair profit. Decoupling destroys the formula used for years which is most fair to consumers.

Utility Conservation Programs
Utilities are incentivized to sell less product by encouraging energy conservation among their customers. They are rewarded for the decrease in product sales volume due to the conservation efforts with annual price increases to make up for their lost net revenue. Fair market practices dictate that if a consumer conserves they should receive the benefit for their conservation efforts. Under this scheme the utility receives a rate increase for any conservation efforts whether aided by the utility or accomplished by the customer.

RINs Trading Programs
Renewable Identification Numbers are assigned to batches of fuel that have been blended with ethanol. Oil companies use the RINs numbers to prove to the federal government that they are meeting the federal mandates for ethanol blending. Small retailers want the state to prevent the oil companies from restricting their ability to blend. This is because when the retailers do the blending themselves they are given possession of the RINs number. The small retailers then sell the number back to the oil companies because they need the number to prove to the federal government that the fuel was indeed blended. This transaction costs up to 12 cents per gallon. Guess who really pays for this? You, the consumer.

Automobile Carbon Taxes
Next on the horizon is the idea to tax you for your car's emissions. I don't have a lot of information on this yet but look out for this as well.


grabideau said...

Rep Lynn,
Thank you for the energy summary.

It seems that we are attempting to put a square peg in a round hole here - popular subject gets the oil so to speak - no pun intended. All we need to do is look at the energies that we currently consume, review them for energy conservation/improvement opportunities, and then set targets and goals to meet improved standards or convert to a suitable cost efficient and pollution improved alternative. At the same time funding must be provided for sustainable affordable energy research.

Ethanol does not work for me to assist in meeting our energy and food production goals as it is currently manufactured. Thanks, Gary Rabideau

Ron Jones said...

Rep. Lynn,

My favorite is the "Decoupling Mechanisms." Sounds like the government/business partnership has been refined into a well-oiled mechanism for plunder since the days of Cornelius Vanderbilt.

This laundry list of ways for the federal government to extort more money from my children is really no surprise. And it is my children who will pay the price for our generations greed & sense of entitlement.

It saddens me that so many government educated Tennesseans are willing, nay, anxious to abdicate their personal responsibility in return for...what? taxpayer funded education, subsistence-level retirement, health care?

God save us all.