Friday, February 11, 2011

A new power struggle

From the 14 February 2011 Greater Niagara Newspapers

By Bob Confer

If you’re a regular reader of this column you know that the high cost of electricity is a recurring theme. As someone whose company is a heavy power user, I can’t help but rail against New York’s exorbitant cost structure and its adverse impact on economic development.

That said, you’d think I’d be delighted about Governor Andrew Cuomo’s Recharge New York program. Well, I’m not.

Cuomo mentioned this initiative in his budget proposal. It would replace the outdated and broken Power For Jobs (PFJ) program that provides low-cost electricity to 500 businesses. It would grant some semblance of cost certainty to the affected firms by making the program permanent unlike PFJ, which has been renewed on an annual basis since 2005. They would also receive their allocations for 7 years at a time.

So far so good. But, things start to get tricky with the expansion of the program. Cuomo’s proposal would double the current PFJ “budget” from 455 to 910 megawatts.

Where will that power come from? You.

That newfound 455-megawatt block is currently used to cut upstate residential power bills by an average of $3 per month. To most elected officials that may not sound like a princely sum. But, over a year’s time that could be $36. That’s big money to any couple trying to raise a family or any senior on a fixed income when gas, food, and taxes keep going up with no end in sight.

Sadly, it’s a widely held belief by those same officials and corporate leaders that the block of power would have a greater economic impact in the hands of businesses. That same argument was presented during the relicensing of the Niagara Power Project, which is why not one state-level politician fought for John and Jane Doe’s utility bills during the process.

That’s a really poor belief for a couple of reasons. For starters, every economy needs 2 things, creators and consumers. Both should be equal in the eyes of the markets and neither party should be granted favor over the other or have their purchasing power minimized by the invisible hand of government. Secondly, there is no greater economic incentive than putting money in the hands of the consumer. You’re guaranteed homeowners spend the power savings that they now have available. Collectively, that’s big money being pumped into the economy. In Niagara and Erie Counties alone that’s $21.6 million per year.

The Governor has attempted to lessen Recharge New York’s blow by saying that it will be equalized by the 2014 phase-out of a tax levied on your power, known as the incremental state assessment. He failed to say that tax is relatively new, having just gone into effect on July 1, 2009. Slated to have a 5-year life span, it was one of the state’s ways to “balance the budget”. That tax was just under $3 on my home bill last month.

If we follow Cuomo’s logic, it’s a wash. But is it? Under Recharge New York, cheap power and its $3 savings that we’ve had for quite some time will be taken away from us forever. Within a few years, though, we’ll have back another $3 that was rightly ours until only recently. I don’t know about you, but it seems like we’d be losing $6 per month (or $72/year) until 2014 and after that we’d be losing $3 per month.

When the government takes away such a benefit to the people and gives it to businesses it has the same impact as a tax (your government-influenced cost of living increases), so it may as well be called one. That begs the question, is it morally and economically prudent to charge a tax upon families so they can prop up businesses? The answer should be a resounding “no”.

So, if you’re pennywise and value any savings you can get, especially with other taxes –like school taxes - certain to go through the roof this year, make it a point to write your senator and assemblyperson and ask that they stop Recharge New York and keep it from taking a charge out of your pocketbook.

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