Rather than driving Louisiana energy customer bills sky high, the new Legislature and incoming Republican Gov. Jeff Landry Administration need to cut off at the pass special interests and rent seekers.
Regarding accelerating use of offshore wind-generated power to meet arbitrary goals applauded by climate alarmists, both Democrat Pres. Joe Biden and Democrat Louisiana Gov. John Bel Edwards haven’t had a good few months. Biden wanted 30 gigawatts of power capacity nationally from wind by 2030, and Edwards shot for 5 GW by 2035. At present, U.S. capacity stands at 150 MW at one location off of Rhode Island.
The story goes that these installations provide lots of jobs to build and few costs to maintain, staying out of almost everybody’s way. To jag along this development, Biden had a then-Democrat-controlled Congress lard up almost $11 billion dedicated to offshore wind expansion and dangle various tax credits from 10 to 30 percent for those involved in production and support of offshore wind power generation. Some states, but not Louisiana, added their own incentives.
Neither aspiration ever has been regarded as a realistic goal for a number of reasons. Undeveloped technology getting more costly by the minute after Biden economic policies unleashed large inflationary pressures, expensive backup battery needs, an insufficient power grid, and heavier reliance on unfriendly regimes for resources such as Red China all already make such projects economically unviable.
Yet lately news has become more pessimistic than ever nationally as one by one companies have put expansion plans for offshore wind power on hold. In fact, the economics have become so bad just this month firms walked away from two large-scale projects on the east coast, preferring to forfeit huge tax incentives already collected. Meanwhile, equity prices for firms with large exposure to disappearing possible future wind power revenues have cratered this year. Reflecting this, a much-ballyhooed maiden auction of leases for this purpose offshore Lake Charles sold exactly one tract for a relative pittance.
There are only two tactics that reverse this to make offshore wind power anywhere close to financially viable for firms: taxpayer-borne financial incentives subsidizing production and ratepayer-borne artificial restrictions boosting wind production at the expense of other forms of energy. Thus, as offshore wind power goals officially become unattainable, ideologues and market beneficiaries of it preach a simple solution: more government subsidization through grants and tax exceptions and more ratepayer subsidization by making them foot the higher costs for equipment and infrastructure (which would have to include transmission lines, meaning other state regulatory changes to promote interstate cooperation and coercing building and maintenance).
Fortunately, Louisiana hasn’t done much to feed this mania. It has a tax credit for residential properties and offshore wind concerns could use the state’s Industrial Tax Exemption Program to finagle local breaks. But it doesn’t subsidize and the Public Service Commission, unlike states with a heavy wind power presence and almost all of those now engaged in trying to drum up offshore business, doesn’t have an imposed renewable energy portfolio standard specifying a minimum proportion of wind and other renewable sources of power, although New Orleans which regulates it own power provider has one that vaguely commits the provider to generating power at net zero carbon emissions by 2040 and no emissions by 2050 but not setting in stone the proportion of renewables.
The state’s incoming government can avoid taking more from the people to assuage climate alarmists and those wanting to make a buck through political influence by adhering to the policy of no subsidies or tax breaks (as for local governments using ITEP as a form of subsidization, overall property tax reform can remove this possibility). As for the potential imposition of a renewable portfolio standard, powers of the LPSC are granted entirely by law, so the new government should pass one prohibiting the LPSC from establishing such a portfolio.
Louisianans shouldn’t have their pocketbooks pilfered for a needless transfer of wealth to government-identified winners. Let the idea of anything but free market-determined wind power provision twist in the wind.