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Senator Doug Whitsett, R- Klamath Falls, District 28

Phone: 503-986-1728    900 Court St. NE, S-302, Salem Oregon 97301
Email: sen.dougwhitsett@state.or.us     Website: http://www.leg.state.or.us/whitsett
E-Newsletter                     March 6, 2008 

Oregon is on the Wrong Course

       The promise of achieving economic recovery by creating green jobs sounds too good to be true. Unfortunately, it is too good to be true. No currently promoted renewable energy source can produce reliable, useful energy at competitive prices except for hydropower.

       Hydropower now produces sixteen times as much renewable energy as wind and solar power combined in the United States. Moreover, hydropower is reliable, consistent, and is produced at a small fraction of the cost of wind and solar generation. In fact, unregulated hydropower is far and away the least expensive source of electricity. Unfortunately, our state and regional policies are focused upon increasing the costs of hydropower regulatory, fish passage, and water quality standards with the purpose of destroying the economic viability of that resource. More hydropower dams are being dismantled than built.

       The total cost of United States energy increased 80 percent during the past decade at the same time that United States energy consumption only increased 5 percent. That 80 percent increase in energy cost has allowed rapidly developing technologies for geothermal and biomass energy production to approach competitiveness. In fact, both of these technologies now require subsidies of less than one dollar per megawatt hour.

       Total federal renewable energy subsidies have increased more than three fold during that ten year period. The clear evidence shows that subsidizing several forms of renewable energy production has been a fool’s errand and a colossal waste of tax revenue. The imprudence of investing $3 billion in annual federal subsidies for ethanol production has been widely reported and rightfully lampooned. Although ethanol is the highest total dollar subsidy, it is unfortunately not the worst percentage subsidy.

       In 2008 more than $1 billion federal taxpayer dollars were spent on wind and solar power renewable energy subsidies in the effort to make them competitive with generation with natural gas, oil, and coal. The unbelievable amount of those subsidies is underscored by the 2008 report from the United States Energy Information Administration. Solar energy receives a federal subsidy of $24.34 per Megawatt hour. Wind power is subsidized at $23.37 per Megawatt hour. After more than ten years of subsidized production the combined wind and solar generation is contributing less than one percent of United States energy consumption.

       In addition, twenty seven states have passed renewable portfolio standards that mandate from 4 to 25 percent usage of renewable power. Those mandates become requirements between 2009 and 2025. Most of these states, including Oregon, have added their own state tax credits and production income deductions to the already staggering federal incentives. This current path of handouts and mandates will inevitably result in even higher energy prices.

       Our own state leadership is actively participating in the development of unaffordable and unsustainable green energy. For instance, millions of hard earned Oregon tax dollars have been invested to entice Solar World to locate in Oregon. The company employs workers at a median wage of about $3,200 per month to build solar panels. This creates a monthly payroll of more than $1.1 million.

       While that sounds pretty good you need to hear the rest of the story. We understand that Solar Fun, located in China, is now producing eight times as many solar panels of essentially equal quality with a monthly payroll of $300,000. The Chinese corporation produces eight times as many solar panels for about one fourth the costs. With that gigantic competitive disadvantage we wonder how Solar World can remain economically viable regardless of the amount of state and federal tax dollars made available to subsidize their solar panel production. A business model that requires significant subsidies to produce a product is simply not sustainable.

       Oregon is rushing to subsidize the production of unaffordable green energy. In the short term, the construction of renewable energy facilities will create jobs. Operating and maintaining those renewable energy facilities will sustain jobs. The renewable portfolio standard insures that Oregon ratepayers will be forced to pay the significant increased cost of that renewable energy production. However, the certain long term outcome of unaffordable energy prices is the creation of a competitive disadvantage for Oregon businesses. The combined effects of the tax credit incentives to build unaffordable renewable energy production in Oregon, and the Renewable Portfolio Standard that requires the ratepayers to use the unaffordable energy, will continue to drive energy prices upward. Expect to see businesses either close, or migrate out of Oregon at an increasing rates as energy prices continue to escalate in Ore gon. High energy prices are job killers. Unfortunately, ongoing Oregon public policy will insure the unending upward spiral of energy prices.

       Oregonians are paying for these failed energy policies three times over. First, they pay higher prices at the electric meter. Then they must pay higher taxes to compensate for all the tax deductions and credits provided to produce the unaffordable power. Finally, they pay higher prices for retail goods and services because those business providers must pass on their increased costs caused by unaffordable energy prices.

       Moreover, to purposely inflate energy prices is an environmental injustice targeted at our poor and disadvantaged citizens. It insures the continued loss of Oregon jobs and the continued decline of Oregon incomes. Oregon has consistently been a national leader in unemployment, poverty and hunger for more than two decades. The figures released by the Employment Department this week show most Eastern and Southern Oregon counties experiencing unemployment ranging from 12.5 to 19.5 percent. When those bleak figures are adjusted to include those who were self employed, those who have been out of work for more than a year, and for those working significantly less hours, those figures rise to from 20 to 28 percent!  Unaffordable energy prices will continue to be a significant driver of Oregon’s national leadership in unemployment and poverty until our public energy polices are changed.

       Regrettably, our Governor is continuing his “full speed ahead” policies to make Oregon the national leader in unaffordable renewable energy. He continues to promote ways to subsidize unaffordable wind and solar technologies while leading the charge to destroy inexpensive hydropower generation. In fact, he has introduced an entire portfolio of bills that will enhance the development and production of unaffordable renewable energy in Oregon. The most onerous of those bills is Senate Bill 80, which would impose significant energy taxes in the form of a carbon cap-and-trade scheme. The purpose, and the certain outcome, of cap-and-trade are to increase the cost of fossil fuel energy in order to make renewable sources more competitive.

       The manipulation of energy costs through public policy simply violates the civil rights of those who must choose between heating their homes and feeding their children. Oregon policy makers appear unable or unwilling to recognize that reality in their continuing zeal to make Oregon the greenest state on the planet.

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