Coal plant bill would saddle risk takers with price hikes without input

by: Eric B.

Fri Dec 18, 2009 at 13:03:49 PM EST

The House is expected to reconvene here in about 45 minutes, and one of the items on their agenda is expected to be the awful coal plant building bill passed yesterday by the Senate on a party line vote.  Here's what the bill willl actually do:

It will allow Consumers to ignore a report from the MPSC earlier this year that said that the Karn-Weadock expansion near Bay City is not necessary unless Consumers first retires some of its current coal production. That report was based on what we've all come to recognize is a reality into the near future, which is that demand for electricity in the state of Michigan will decline, not increase. This will have the effect of replacing more recent, better information with the findings of the report on which the enabling legislation was written, which was already outdated when it was used two years ago.

It will allow Consumers to build that plant without assessing whether we need it, and then -- thanks to the energy legislation that reregulated the state's utilities -- pass those costs on to Consumers' ratepayers. That is, struggling families and businesses will be compelled to pay for the power plant in terms of higher utility bills without having any say on whether they wish to do so.

All of this will happen outside of the marketplace that Republicans and conservatives claim to cherish. It represents government picking and choosing a winner in the marketplace and guaranteeing it a special status by not applying any market principles to it whatsoever. The company building the plant is not the party taking the risks.  The risks are all borne by ratepayers. It also does not have to measure up in terms of competitiveness, and as we all know, Consumers is already not playing in a level market because the company doesn't have to pay for the costs of its pollution -- fisheries money lost because of mercury pollution, health care costs, etc...

It will further allow Consumers to pass off these increasing costs for power generation that is not needed to a declining customer base, and do so in a way that does not permit Consumers any avenue whatsoever to object. That is, this bill would prohibit the risk takers from opting out of taking the risk.  And, considering that demand for electricity is expected to decline (and with it, a declining pool of risk takers), and that costs of a coal plant production are expected to continue increasing, there is considerable reason for risk takers to object.

This legislation is not just anti-envrionment. It is also anti-ratepayer, and also anti-market.  It will also undercut the growing green energy market and stifle innovation by providing government support and subsidy to aging technology. If you ever wanted an example of government meddling in the marketplace to the detriment of us all, this is it.