Net Metering Levels The Energy Playing Field

By Barry Goldwater Jr.

I don’t recall Joe Galli, the former executive director of the North Scottsdale Chamber of Commerce, ever taking up the cause of economically disadvantaged people in south Phoenix. Nor do I understand why he doesn’t identify his new role as the Executive Director of  Market Freedom Alliance. It’s perplexing that the head of an organization by that name would be expressing disapproval of free market enterprise. Nor do I understand Mr. Galli’s motives in writing an article critical of net metering. Perhaps APS has found another front group to attack solar energy.

I am Chairman of TUSK, which stands for Tell Utilities Solar won’t be Killed. It’s a conservative group that supports energy choice and energy independence.

APS doesn’t like net metering because it forces the utility monopoly to pay a fair price for the excess solar energy rooftop solar users send back to the grid. That’s not a subsidy, that’s commerce. In fact Arizona subsidies for rooftop solar power are long gone. That’s a good thing. The industry is able to stand on its own two feet.

You can’t say the same about APS. It’s a regulated monopoly that depends on a government set rate of return of 10%. If APS makes some bad calls, no worries, they can ask regulators for a rate hike. And captive ratepayers have no choice. It’s not like they can switch power companies. As far as national subsidies, the fossil fuel industry is one of the most heavily subsidized industries in the country, receiving far more than solar.

The rooftop solar industry, which supports TUSK, is made up of private businesses, not regulated monopolies. Rooftop solar is giving these monopolies the first competition they ever had and they don’t like it; and apparently neither does Mr. Galli.

Whatever Joe’s motives in writing an article critical of net metering, I’d like to set the record straight. The federal government has dozens of favorable tax structures that benefit traditional energy sources such as natural gas, coal and nuclear.  Yet for solar there is only one and the benefit of the lower tax treatment is passed on to the end consumer through lower electricity costs.  As any good republican knows, lower taxes means more economic growth and more jobs.  Lower taxes on solar are no different.

Secondly, Mr. Galli makes the claim that rooftop solar is for the rich. That’s simply not the case. 57% of the rooftop systems installed in Arizona are installed in zip codes where the median household income is at or below the Arizona median income. That’s according to the Arizona Solar Energy Industry Association, a respected trade group.

Monopolies such as APS don’t like leased rooftop solar which has made solar available to people of more modest means. In fact, APS supports a property tax that targets leased rooftop solar customers. Hopefully Mr. Galli’s concern for those struggling in this economy will extend to working class families and retirees using solar; and perhaps he will write an article critical of this impending property tax.

Conservatives are smart enough to know that net metering opens energy choice and energy independence to more people through rooftop solar. And I am certain that conservatives can see though APS’ attempts to tax a competitor out of business.

Net Metering Tax Credits Discriminate

Recent legislation providing solar tax credits for residential homeowners has allowed billionaires, corporations, and Wall Street financiers to profit at the expense of working class Americans.  Solar corporations leasing panels to home owners, rather than selling, have reaped the financial benefit of solar tax credits intended for home owners to the tune of hundreds of millions.  These tax credits to solar companies have boosted dividends for their shareholders at taxpayers’ expense, while panel-leasing home owners get no immediate financial benefit.

meterWorse.  Solar tax credits discriminate against lower income communities.  Group housing, where many lower income families reside, cannot install residential solar panels, and are therefore not eligible from the get-go for these special tax credits.

Arizona is subsidizing the solar industry with $1.2 billion on residential solar, and not a dime goes to the state’s lowest income sectors – yet, another reason not to have discriminatory solar tax credits.

Further, after residential panels are installed at huge costs to taxpayers, the system of net metering goes to work, also discriminating against the working class.  Owners of solar panels can buy power from the grid as needed, or ship surplus power back to the grid when they produce more than they use.  Under net metering, solar panel owners, however, avoid paying for the service and repairs to maintain the grid.  These costs to maintain the grid are then shifted to non-solar users, placing a higher financial burden on this group, resulting in a disproportionate share of the burden falling on the aforementioned lower income sectors.

In Arizona, taxpayer subsidized solar panel ownership has led to the adding of “environmental programs cost adjustment factor” and renewable energy fees on utility bills, raising financial burdens for all non-solar users, lower income families included.  For example, the city of Scottsdale has a median family income of over $92,000.  Just in the past 5 years, they have had over 1,200 solar installations, which are eligible for state and federal subsidies.  In contrast, an area in south Phoenix with 29,000 residents and an average income of $41,000 has only 45 residential solar installations.  This is just an example, but the statistics are undeniable:  Taxpayer subsidies go to wealthier communities by a factor of 26 times more than lower income communities.

Regressive solar tax credits should end immediately.  Why have we chosen one industry over another?  And worse, we’ve chosen a discriminatory industry that keeps lower income communities down by unfairly forcing them to pay for others solar installation and operation.  Under any sun, these policies are just plain wrong.

Joe Galli

Former Executive Director – North Scottsdale Chamber of Commerce

Take The Quiz! Who Said It?

Who Said It!

It’s time to have a little fun and see if our readers can tell the difference between Fred DuVal and Scott Smith. We’ve pulled a number of quotes from or about each candidate on issues important to Arizonans. We’ll post the issue followed by the quote and then let the readers guess who said it. (And no using Google search to cheat!)

COMPREHENSIVE IMMIGRATION REFORM

A. “…we cannot continue with a broken system that keeps millions of people living in the shadows of our communities.”

B. “he supports driver’s licenses for young immigrants awarded work permits under a new Obama administration program. He also praised the U.S. Senate’s Gang of Eight for working on comprehensive immigration reform legislation.

DREAMERS

A. “My first action as governor will be to rescind Gov Brewer’s Executive Order against driver’s licenses for Dreamers.”

B. “The federal government’s half-steps on immigration are not doing us any favors, taking us further from the goal. These side discussions, such as the driver’s licenses discussion, are a distraction. The end game is a fair and just immigration process that includes allowing our DREAMERS to become legal.”

SB 1070

A. On Gov. Brewer “I think she got 1070 wrong…

B. “It’s not exactly the law I would have written.”

COMMON CORE

A. “I believe (Arizona’s) College and Career Ready Standards (Common Core) accomplish these objectives, and I support their implementation.”

B. “I fully support Common Core and applaud Governor Brewer’s efforts to ensure the implementation of these vital standards despite opposition from some members of her party.”

C. “And what we have proposed here, whether you call it common core or ready achievement or whatever, I don’t care the label you put on it, we have to do it. …”

D. “Rather than a top-down, one-size-fits-all, Washington, D.C. approach to education, Common Core is a perfect example of how states can lead the way on improving education.”

OBAMACARE MEDICAID EXPANSION

A. “It would be a terrible mistake not to expand Medicaid on federal dollars.”

B. “I supported the governors Medicaid restoration because she did what was best for Arizona.”

TAXES / BUDGET

A. “After the massive cuts to K-12 schools, defunding all-day kindergarten, and ending the once-cent sales tax that funds our children’s schools, the last thing the folks at the Capitol should do is to set another tripwire on our children’s road to opportunity.”

B. “Nothing is more frustrating than seeing a state legislator cutting spending without raising taxes.”

ENVIRONMENT

A. “It’s the Senate’s turn to pass energy-climate legislation.”

B. “I welcome the opportunity to join with 1,000 of my peers in this truly bipartisan effort to improve not only the environment, but our communities and our nation.”

POLITICAL LEANINGS:

A. “…a self-described moderate, said serving in the House would be a “wonderful opportunity to reach across the divide.”

B. “He will allow himself to be called a progressive, but takes pains to note the lowercase ‘p’…”

 

Feel free to post your answers in the comments!

Will Kyrsten Sinema Support Obama’s Job Destroying Cap-and-Trade Scheme?

NRCC

Kyrsten Sinema Will Have to Choose Between Saving Jobs or Backing her Friends in D.C.

WASHINGTON – Is Kyrsten Sinema going to listen to Arizona voters and save American jobs, or will she fall in line with her Democrat allies and support President Obama’s latest cap-and-trade scheme that could cost the U.S. economy $50 billion a year and eliminate an estimated 224,000 jobs?

A recent study, issued by the United States Chamber of Commerce, found that President Obama’s new cap-and-trade edict will force more than a “third of the coal-fired power capacity to close by 2030.”

“Not only will this new Obama regulation cost billions of dollars for taxpayers, but it will limit American energy production and spike electricity prices – hurting families across America,” said NRCC Communications Director Andrea Bozek. “Arizona families deserve a Republican leader in Congress that will stand up to President Obama and his Administration’s job-destroying regulations.”

Will Kyrsten Sinema Support Obama’s Job Destroying Cap-and-Trade Scheme.
(Michael Bastasch, EPA To Unilaterally Push Cap And Trade On Carbon Emissions, The Daily Caller, 5/27/14)

“President Obama’s climate rule change will force more than a “third of the coal-fired power capacity to close by 2030.”
(Mark Drajem, Chamber Study Predicts Obama Climate Rule Will Kill Jobs, Bloomberg, 5/28/14)

Cost nearly $50 billion and eliminate an estimated 224,000 jobs
(Energy Institute Report Finds That Potential New EPA Carbon Regulations Will Damage U.S. Economy, U.S. Chamber of Commerce, 5/28/14)

It will limit American energy production and spike electricity prices.
(Ralph Vartabedian, U.S. electricity prices may be going up for good, LA Times, 4/25/14)

ELECTRICITY: “U.S. electricity prices may be going up for good. There is a growing fragility in the U.S. electricity system, experts warn, the result of the shutdown of coal-fired plants, reductions in nuclear power, a shift to more expensive renewable energy and natural gas pipeline constraints. … ‘We are now in an era of rising electricity prices,’ said Philip Moeller, a member of the Federal Energy Regulatory Commission…” (Los Angeles Times)

HEALTH CARE: “More employees are getting hit with higher health insurance premiums and co-payments, and many don’t have the money to cover unexpected medical expenses, a new report finds. More than half of companies (56%) increased employees’ share of health care premiums or co-payments for doctors’ visits in 2013, and 59% of employers say they intend to do the same in 2014, according to the annual Aflac WorkForces Report.” (USA TODAY)

FOOD: “Rising food prices bite into household budgets. Prices are rising for a range of food staples, from meat and pork to fruits and vegetables, squeezing consumers still struggling with modest wage gains.” (USA TODAY)

FLYING, THE MOVIES, OIL CHANGES, AND MORE: “David Rosenberg, chief economist and strategist at Gluskin Sheff, said other areas beyond food and energy … are getting costlier as well. ‘Airline fares are on the rise,’ he said in his morning note Tuesday. ‘Movie tickets and other such recreational services are on the rise. Repair service fees are on the rise. Shelter costs in general are on the rise. Tuition costs are on the rise. Medical service prices are on the rise.’” (NBC News)

Draft Ken Bennett for Arizona Corporation Commission Kicks Off

(Mesa, AZ) – Alan Heywood announced that he is heading up an effort to draft current Secretary of State Ken Bennett to run for the office of Arizona Corporation Commissioner.  Heywood stated: “Ken Bennett is one of the most effective leaders in the history of Arizona.  He had a stellar career in the legislature and was an excellent Senate President.  Bennett also answered the call from Governor Brewer to fill the vacancy as Secretary of State when she was appointed Governor.  Bennett then ran for a second term as Secretary of State, and was elected by an overwhelming number of Arizona voters.”  Heywood went on to say, “Ken has been considering a run for Governor and there is no question that he would make a fine Governor.  However, the Corporation Commission is critically important to the people of Arizona. Commissioners set the price we pay for gas, water, and electricity, and they determine what forms of energy generation will be used.”

“There are many significant decisions that must be made over the next several years concerning energy policy in Arizona. We must elect highly qualified individuals that have extraordinary abilities to make decisions on very difficult and complex energy issues.  Ken Bennett is one of the few in our state that has the background, experience, knowledge and ability to serve in this capacity.  It is hard to imagine that there is a more important office to the people of Arizona during the next several years than that of Corporation Commissioner.”

A webpage has been set up where individuals and/or organizations can register their support to draft Ken Bennett to run for the Arizona Corporation Commission.  It is critical that we let Ken know that he has strong and deep support for his candidacy for this important office.  It is vital that supporters sign up as soon as possible.

Go to: DraftKenBennettForACC.com and tell Secretary Ken Bennett that we need and support him in a run for the Arizona Corporation Commission.

Draft Ken Bennett

 

AZ Electric Utility Rates: Regulated Monopoly or Free-Market Competition?

gavel1-300x223In May, 2013, the Arizona Corporation Commission (ACC) opened a docket to gather information on how Arizona might allow competition among electric companies. On September 11, they shut down the docket with a 4-1 vote, citing “legal issues” that were apparently just too much trouble to tackle. Maybe the ACC will tell us more about that later(?).

So until & unless a new docket on the subject is opened, it’s over.  Of course, Arizona residents do still have a choice: either sign up with the one company legally allowed to provide electric service in your area or go without electricity altogether.

APS and SRP are regulated monopolies. The ACC sets the rate of return that they are allowed to earn on their capital investment in generating stations, transmission lines, and so on*. Their day-to-day operating expenses, depreciation expenses, taxes, etc. are fully covered, dollar-for-dollar, by their customers (you and me). That’s the law.

power-transmissionIs that so bad? Yes, it can be. This is the classic problem of regulated monopolies. While their rate of return is firmly capped by ACC, what are the incentives these monopolies have to hold down their capital expenditures on which they earn that guaranteed return? And what are their incentives to minimize expenses such as payroll? Technically, there aren’t any, other than their own good will and the ACC looking over their shoulder.

So can’t the ACC guarantee that the monopolies are run efficiently?  Oh, would that it were!  No, ACC politicians can’t hope to micromanage a monopoly for efficiency.  On the other hand, if there were competition, the utility would have to run itself efficiently or lose customers to a more efficient competitor that could charge lower prices.

Even when the monopolies are run by people of good will and good intentions**, they can easily slip into inefficient behaviors when there is no overriding free-market, profit-motivated, competitive incentive to stay efficient and keep prices down.

Bell_System_1939I’ve been through deregulation before. From 1969 to 1984, I worked at Bell Laboratories, the research arm of the biggest regulated monopoly ever — the old Bell System (“Ma Bell”).  We even had our own tightly coupled manufacturing arm called Western Electric.  The old Bell System was heavily regulated at the federal, state, and (in some states like Texas) local level.

In the old Bell System our advertising proudly claimed that we provided the world’s best telephone service at the world’s lowest prices. And we really did. But the DOJ Antitrust Division broke up AT&T anyway in 1984, opening the long-distance and equipment manufacturing businesses to competition. It was traumatic for us.  It was complicated.  But the job got done, and today’s telecom industry is much more competitive, innovative, entrepreneurial, and a lot cheaper than it would be if we still had one grand national monopoly.

powerlinesWouldn’t it be nice if the same thing happened with electric power in Arizona?  It could — but not until the ACC opens another docket and attacks those “legal issues” anew.

————————————————————

*Correction: As shown on the ACC website, ACC regulates rates for APS, but on SRP, ACC is only involved when SRP wants to build large power plants (100 Megawatts) or very high voltage transmission lines (115 kVolts.)  ACC also regulates Tucson Electric Power (TEP).

** Regarding good intentions:  A look at the SRP and APS websites will show that these utilities are indeed responsible corporate citizens, offering ratepayers tips, a choice of rate plans, rebates, and other assistance to help customers lower their electric bills. Both utilities and their employees are involved in conservation, and I know first-hand of their contributions to public education in Arizona. But business is business, and there’s nothing like the pressure of competition and the incentive of higher profits to drive a company to run the most efficient operation and offer the lowest prices possible.

MBQF Launches Public Opinion Survey Service – Electric Deregulation Top Issue for Maiden Release

MBQF

Public Policy and Public Education Objective of Service

(Scottsdale, AZ) — MBQF Consulting founder and CEO Mike Noble today announced his objective to provide a quarterly service to inform and enlighten Arizonans on the public policy issues being debated in Arizona and around the Nation. Noble, who is not representing or retained by either side of Arizona’s Electric Deregulation debate being considered by the Arizona Corporation Commission, indicated that future topics would concern issues being considered by the Arizona legislature, the Congress of the United States, as well as multiple ballot initiatives.

“Arizona voters are some of the most engaged in the nation,” Noble said. “By helping identify voters public policy attitudes to decision makers and key stakeholders, we are ensuring their concerns are more clearly understood. It helps enhance the quality of discourse in our state and brings more people to the table.”

MBQF surveyed 516 high efficacy Arizona voters between August 5th and 7th, 2013. Voters were given a summary explanation of the deregulation issue, and then asked whether they supported, opposed or were undecided about electric deregulation. Issue explanations were randomized to present the question in a different order to each half of respondents.

Among Arizona high efficacy voters, 32% of respondents say they support deregulation, 41% say they oppose it, and 27% remain undecided. Republicans are split nearly evenly, with 35% supporting deregulation to 38% who oppose it, and 27% still undecided. Just 26% of Democrats support deregulation, while 45% oppose and 28% remain undecided.   Independent voters showed 34% support, 42% oppose and 24% remain undecided.

“A lesson we take from this is that no side in this debate has really gained any huge dominance over the other,” said Noble. “As is so frequently the case, influence rests with the undecided voters, and that puts all the more pressure on the companies and the stakeholders in this debate to develop new and more convincing arguments to reach Arizona citizens.”

For more information about this survey, or a summary of topline data and wording, please contact Mike Noble at the number above. Included in this survey were 516 autodial responses with rotating samples to ensure issue fairness. The Margin of Error for this survey is +/-4.3% at the 95% confidence level.

EPA overreach at Navajo Generating Station yields bad energy policy for Arizona

By Douglas Little, Phoenix Conservative Examiner

In one of the most egregious abuses of it regulatory power, the EPA is forcing the Navajo Generating Station (NGS) located near Page, AZ to make unnecessary and costly modifications to the generation facilities that would have no measurable effect on emissions in the region.

Using the Clean Air Act as its regulatory authority, the EPA claims that emissions from NGS are contributing to haze in the Grand Canyon area and in February of this year, proposed a regional haze restriction that would require NGS expenditures of $1.1 billion on additional emission reduction controls. This claim also ignores the fact that prevailing winds in the region result in plant emissions being blown away from the Grand Canyon, not towards it.

At the same time the EPA issued their ruling, a U.S. Department of Energy study concluded there would be no visibility improvement at the Grand Canyon after the controls were added. Why would the EPA pursue such a expensive and punitive rule when it would have no perceptible effect on haze at the Grand Canyon?

Opponents of the EPA action are reporting that the EPA doesn’t care about haze at all. They say what the EPA really wants is to provide a precedent for shutting down coal-fired electric generating plants. The Obama administration has a stated objective to reduce carbon emissions and last year attempted to implement a “cap and trade” approach to regulating fossil fuels. Republicans in the US Congress voted down the enabling legislation, with some calling it a “war on coal”.

Why is the EPA going after NGS and why is NGS so critical to Arizona?

The Navajo Generating Station was constructed at a cost of $650 million beginning in 1970 and ending in 1976 when the last of the three generating units was completed. The project was sited in its current location based on readily available coal fuel, a reliable source of water for cooling and the proximity of the city of Page which could provide for many of the project’s infrastructure needs, including an available skilled labor pool. The plant is located approximately 100 miles northeast of the Grand Canyon.

The primary purpose of the NGS was to provide power to support the Central Arizona Project (CAP) which is responsible for supplying Arizona’s share of Colorado River water to central and southern Arizona. To get water from the far northwest corner of Arizona to the rest of the state, CAP built a network of pumps, pipelines and and surface canals over 336 miles in length to transport Arizona’s annual allocation of 1.5 million acre-feet of water to Maricopa, Pima and Pinal counties. The pumps must raise the water over 3000 feet to allow it to flow into central Arizona. The majority of the power generated by NGS powers the CAP pumps.

NGS has a long history of taking a proactive approach to emissions reduction. In 1999, NGS completed a $420 million retrofit that reduced sulfur dioxide emissions from the plant by 90%. In additional overhauls conducted between 2003 and 2005, electrostatic precipitators were overhauled for reliability and performance gains. In 2007, the Salt River Project, the plant operator, conducted studies on how to reduce nitrogen oxide emissions to reduce haze in the region and voluntarily installed emission reduction equipment on each of their three plants between 2009 and 2011.

Apparently, the best efforts of NGS were not good enough. The EPA rule proposed in February is one of the most stringent regional haze rules in the entire nation. It imposes a standard that is more rigorous that the standards for a brand new coal plant. At the 1600 megawatt Prairie State Energy Campus which first came online in 2012, the permitted level of NO emissions are 0.07 parts per million (ppm) while the standard for NGS, a 37 year old plant, is 0.055 ppm.

In an attempt to find a reasonable middle ground, a working group consisting of the EPA, U.S. Department of the Interior, the Salt River Project, the Central Arizona Water Conservation District, the Environmental Defense Fund, the Gila River Indian Community, the Navajo Nation and the Western Resource Advocates began negotiations to find a “Reasonable Progress Alternative” to the BART rule issued by the EPA in February.

These negotiations were closed-door sessions and while the working group included non-stakeholder environmental activists like the Environmental Defense Fund, they did not solicit or accept input from important stakeholders like the Arizona Corporation Commission, which is the primary regulatory body for energy and water resources in the state. Arizona’s Attorney General was also excluded from legal review and comment on the proposed agreement.

Under the proposed settlement, visibility standards and haze causing nitrogen oxide standards are not even addressed. However, in one section of the proposed agreement, the Department of the Interior makes commitments to reduce or offset carbon dioxide emissions by 3% per year “in furtherance of the President’s 2013 Climate Action Plan”. It further states that “This commitment is intended to accomplish two aims: reduce carbon dioxide emissions and demonstrate the workability of a credit-based system to achieve carbon dioxide emission reductions” (emphasis added).

This action by the Department of the Interior and the EPA essentially unilaterally implements “cap and trade” at NGS even though they do not have Congressional authority to do so.

The working group proposal also calls for the early shutdown of one generation unit in 2020 or the equivalent reduction of output equal to the closure of one unit from 2020 to 2030. There is no consideration in the plan for any increased cost in replacement power or an increase in water rates due to those increased power costs.

While clearly not a great deal for SRP, the Navajo and CAP, why are they supporting it? The original rule issued by the EPA would have imposed the most stringent nitrogen oxide standards in the country and would require retrofits to the generating plants at a cost of over a billion dollars. Had that rule been implemented, the economic viability of the entire plant was in jeopardy. The Arizona stakeholders felt that the EPA was holding the plant hostage under its rule-making authority. They felt that the working group agreement was probably the best deal they could get under the circumstances, enabling them to keep the plant going at least until 2035.

Unfortunately, the working group agreement has some fairly large holes in it. Many of the commitments made by the Department of the Interior may require Congressional action to implement. In the current belt-tightening by the federal government, Congress may not be willing to fund the $100 million in commitments made by the Department of the Interior. Furthermore, the agreement anticipates a dramatic increase in water rates, but make no provision for it. In addition, it does not address the loss of jobs, economic benefit and tribal revenues that will result from the terms of the agreement.

A critical reading of the proposed working group agreement seems to indicate that these regulations are not about reducing regional haze. There is no meaningful reduction of nitrogen oxide in the proposed agreement. Instead, there is a focus on carbon dioxide emission reduction. Carbon dioxide is an odorless, colorless gas and has no impact on visible haze.

In addition, the agreement is an apparent attempt to unilaterally implement a “cap and trade” system for regulating carbon emissions for which the Department of the Interior and the EPA have no statutory or regulatory authority.

Finally, it appears to be a blatant EPA attack on coal-fired generating plants with the full support and encouragement of environmental activists.

Is the EPA doing all of this for a reduction in haze that the federal government’s own study said would be imperceptible to the human eye? More likely, the haze standard simply gives the EPA the opening they need to accomplish their real objectives of shutting another coal plant and promoting Obama’s energy agenda.

EPA overreach? Good energy policy? The right choice for Arizona? You decide.

The public comment period on the proposed agreement will close on October 4th, 2013.

You can go here to comment: http://www.regulations.gov/#!documentDetail;D=EPA-R09-OAR-2013-0009-0111

A Natural (Gas) Recovery

Reposted from Western Free Press

By Greg Conterio

The economy is bad.  Let’s be honest—despite the spin, with the media trying to convince us all that less than 2% annual GDP growth is a good-thing, and 7% unemployment represents “light at the end of the tunnel,” the economy is still bad.  I hear from my clients across a variety of industries, and they agree—it’s bleak.  Everyone is hurting.  The talk is whether this really is the “new normal.”  For the first time in my adult life, I hear people talking of an actual recovery in terms of “if” not “when.”

natural_gasWell, I’m not ready to give up so easily.  This may be the longest, worst, most depressed economic period since the 1930’s (…which was the last time we had a Progressive in office, but I digress…) but I don’t think this is the new normal. Not by a long-shot.

Suppose I were to tell you we might be sitting on the cusp of an economic surge of unprecedented proportion.  A surge modestly projected to increase annual GDP by half a trillion dollars or more in the next seven years.  Do you think that might create a few jobs?  Bump-up our standard of living a little bit?  Perhaps even pay-down some of our astronomical national debt, provided we can get those clowns in Washington to work within a rational spending allowance?  Of course, much is dependent upon those same clowns, and our ability to convince them who they really work for, but I’ll get back to that.

McKinsey & Company released a report this month titled Game Changers: Five opportunities for U.S. Growth and renewal.  You can download the complete report; it is well worth reading if you are interested in the potential future of our economy.

While other writers have ably dealt with the complete McKinsey report, such as the Wall Street JournalBusiness Insider, and Counsel on Foreign Relations, I would like to focus on the one sector from the report with the most potential impact, the one that I also see as something of a linchpin to unlocking the other sectors—that of course being the energy sector, with special focus on the emerging shale oil and natural gas opportunities.

Beginning in about 2005-2007, U.S. shale gas production began to climb dramatically as a result of technical advances in hydraulic fracturing and horizontal drilling.  Since 2007, annual gas production has grown by 50% per year, and with large new fields discovered recently in the Bakken, Marcellus, Utica and Morrison formations, the U.S. has more than 317 trillion (with a “T”) cubic feet of proved natural gas reserves.

While there have been equally encouraging discoveries in oil reserves, shale gas is particularly exciting and has huge economic potential to affect a number of different sectors.

Energy independence

The boom in natural gas production has forced prices down domestically, from $13/MMBtu (one million Btu, or British Thermal Units) to about $4/MMBtu, or about a 60% decrease.  This is already creating a drive to convert from oil to natural gas for industrial and residential andcommercial transportation energy needs.  Moving from oil to natural gas cannot happen overnight, and with the current administration’s hostility to both oil and coal, prices and domestic development of those resources can be expected to remain deliberately inflated for the foreseeable future.  But as natural gas development gains momentum, the prospect of exporting LNG or liquid natural gas creates the possibility of neutralizing the cost of continued oil imports.

Cross-sector economic growth

Becoming an exporter of LNG means renovating part of our transport industry, specifically converting under-utilized oil import terminals into export terminals for LNG.  According to the McKinsey report, the U.S. Department of Energy has already approved two such conversions, and is reviewing applications for 20 more.  This of course represents a “stimulus” and job creation for several years’ worth of construction, engineering, and infrastructure projects, and represents just one of the ancillary effects of the boom in natural gas.  Dramatically increased energy costs over the past several years have been a significant contributor to rising costs of goods and services across the board, whether it be transportation, electricity, heating, or nearly anything you care to name.  The cost and relative abundance of energy is one of the keys to unlocking economic growth in all sectors, which is why McKinsey’s report shows the potential impact of energy, and particularly shale gas, as far outstripping the other game-changing sectors.  It is the one sector that impacts ALL others.  Put another way, it is the one game-changing sector that can significantly hamstring all the others if it were taken out of the picture.

A cynic may point out that the only reason natural gas is booming right now it that the current administration didn’t anticipate the industry’s sudden rise, and thus did not react quickly enough to dampen it with regulation the way it has done with coal and oil.  I would argue however that trying to do so now would cause such economic harm, as well as cost so many jobs, that even this administration could not withstand the resulting outcry.  The genie is already out of the bottle, so to speak.  But as the McKinsey report points out, it remains keenly in the best interest of the gas industry to continue to develop safe, clean, and responsible methods of recovery.  Certain political cohorts—and we all know who they are!—have already demonstrated their willingness to go to completely dishonest lengths to vilify techniques like hydraulic fracturing, so it’s easy to imagine what they would do if they didn’t have to make things up.  Still, without interference from the government, or hysterical propaganda from the environmental movement, natural gas is a good reason to believe in a brighter economic future.

BREAKING: Environmentalists Holding Secret Meetings with SRP – Deal Imminent

We have learned Salt River Project has reached a backroom deal with radical enviros for a partial early shut down of the Navajo Station Generating Station to address so-called visibility issues at the Grand Canyon. The deal will cost a lot of jobs.

The secret deal was cut by what they call a Technical Working Group that apparently has been meeting for several months with EPA’s blessing. The Sierra Club did not like the discussion and they publicly stomped out of the room, but the even more radical Environmental Defense Fund stayed in. Seems they are hell bent on force-feeding a job killing deal to Arizona even though a Department of Energy study says there won’t be any visibility benefit at the Grand Canyon from more regulations. That’s because Canyon visibility is impacted by smog and car emissions coming from, you guessed it: California.

Just you wait. SRP will try to sell it to Arizona as the only compromise they can get. They will say that the well-funded extremists who are trying to shut them down have forced their hand.

It’s not true.

The truth is we need to stand up and tell Obama and the radical environmentalists to follow the law and make sure that the plant’s future is talked about in the light of day. We can’t ignore that NGS was a very public deal brokered by Congress decades ago to provide power for Central Arizona Project which pumps water across the state. Last we checked water is still essential to the state’s survival. And with this new “deal” water prices could triple, hurting our economy and families.

Most outrageous, is that some think appeasing the liberal activist agenda is more important than taking care of Arizona’s future.

Shame on SRP for caving in to these radicals, Arizona deserves better.

Submitted by an anonymous conservative activist.