New Mexico has a renewable portfolio standard (RPS) that mandates that so-called “renewable” sources account for 10 percent of all power generated by 2011; 15 percent for 2015; and 20 percent for 2020 and thereafter. While environmentalists would have us believe that these government regulations will create jobs and spur economic growth, the real story is far different. According to a new study commissioned by the American Tradition Institute and the Rio Grande Foundation finds that New Mexicans will pay $2.3 billion more for electricity than they otherwise would because of the RPS. The new study can be found here. A “quick findings” page can be found here.
The Washington, DC-based Competitive Enterprise Institute (CEI) and the New Mexico-based Rio Grande Foundation have released a new report on the Environmental Protection Agency’s (EPA’s)rampant abuse of power in enforcing the “Regional Haze Provision” of the federal Clean Air Act.
Full text of the new report is available online.
The specific target of the EPA in this unfolding debacle is the San Juan Generating Station in the Four Corners region of New Mexico. Author William Yeatman, Assistant Director, Center for Energy and Environment, at CEI, describes in detail how the EPA ran roughshod over New Mexico’s rightful authority under the Clean Air Act, at a cost of almost $340 million to New Mexico ratepayers.
As Yeatman writes in the paper, “New Mexico proposed a plan in full compliance with federal and state laws and regulations. In a contortion of logic, the EPA is rejecting New Mexico’s cost-effective analysis for a plan that achieves the EPA’s own target for cost-effectiveness. It is the only state subject to this bizarre reasoning.”
While overreach on the part of the EPA is not uncommon, Yeatman explains in detail that “New Mexico is being treated differently than every other state, in order to justify $700 million in costs beyond what the EPA’s own rules stipulate are necessary.”
Said Paul Gessing, President of the Rio Grande Foundation, “In New Mexico, we care deeply about both clean air and economic growth. Our own policymakers in the Environmental Department came up with a cost-effective solution that fully-complied with the EPA’s own guidelines, but that was completely ignored by the out-of-control federal agency.”
Concluded Yeatman, “New Mexico lawmakers should send a strong message to the EPA that its actions are unacceptable. They should enact a resolution condemning the EPA’s arbitrary regulations and demand that New Mexico be treated like its peers. In so doing, they would be governing in the best interest of the nearly 500,000 New Mexicans who face a $120 per year electricity tax to pay for invisible benefits.”
Under New Mexico’s “Renewable Portfolio Standard” law, regulated electric utilities must derive 15 percent of their electricity needs from renewable sources by 2015, with 20 percent to come from renewable sources by 2020. Starting in late June, Public Service Company of New Mexico will begin holding Integrated Resource Planning public meetings to determine how it will comply with the renewable mandate over the next decade-plus.
Already, organizations like New Mexico Industrial Energy Consumers are expressing concern over rates that have gone up by 24 percent in the past three years.
PNM for its part has requested a 21 percent increase. To be fair, these hikes have not been driven by New Mexico’s foray into renewable energy, which now stands at 6 percent of electricity sales, but mandated increase in more costly renewable sources will result in even greater hikes over time as these mandates take hold.
Unfortunately, not only is New Mexico’s mandate forcing New Mexico utility customers to pay for more expensive “renewable” electricity, the law which originally allowed utilities to use the renewable energy source that made the most economic sense was later changed to force utilities to adhere to specific “mandates-within-a-mandate.”
This additional mandate means that investor-owned-utilities must derive at least 20 percent of their renewable power from wind, 20 percent from solar, 10 percent from “other technologies” like biomass and, by 2015, 3 percent of the electricity must be derived through distributed generation.
So-called distributed generation is yet another onerous requirement on utilities. Specifically, this means that PNM and other investor-owned-utilities such as El Paso Electric must now rely on output from many small energy sources. This has the makings of a paperwork, security and reliability nightmare that will further drive up costs for consumers.
Because of these policies, particularly the solar requirement — although the “other technologies” and distributed generation requirements are problematic — New Mexicans face higher electricity prices. That is, even after significant federal subsidies for renewables, which they are paying for yet again, are priced-into the equation. Nonetheless, the cost of solar thermal electricity, made by using the sun’s heat to boil water and spin a turbine, would be nearly three times that of coal and more than twice that of natural gas.
All of these costs and subsidies are passed on to consumers.
Of course, in today’s difficult economy, with jobs and economic growth taking precedence over supposedly high-minded “green” energy mandates, politicians should realize that unrealistic mandates will kill New Mexico’s economy and hurt the very consumers they are supposed to protect.
Take California as a prime example.
There are many reasons that have caused California to become an economic basket case. Idealism in pursuit of unrealistic environmental goals like the state’s renewable portfolio standard is one. In an executive order issued in November 2008, Gov. Arnold Schwarzenegger set in law goals of generating 20 percent of all electricity from renewable sources by 2010 and 33 percent by 2020. According to the state’s leading utility, PG&E, the state is currently at 12 or 13 percent renewable.
There are really only two viable ways forward at this point.
First, and in the shorter term, regulations and laws must be loosened in order to give utilities the flexibility to determine what sources to derive “renewable” energy from. After all, since wind is half as expensive as solar, shouldn’t PNM and other utilities at least have the freedom to generate energy from the least-costly source?
Ultimately, the public, utility customers and our elected leaders must decide when the economic costs of “renewable” energy exceed benefits. The only logical and, dare I say moral, thing to do is to give consumers the freedom to choose for themselves. If it is worth it for a business or consumer to pay extra for the peace of mind of supporting the growth of renewable energy sources like solar or wind, they should have the freedom to do this.
It is simply unfair and wrong for a minority to use government to force their preferences on the majority of consumers who wish to buy the least expensive and most reliable electricity possible.
Consumers have two opportunities to weigh in on this issue. Once in the upcoming public hearings and again in November when three slots on the PRC are up for election.
Here’s hoping that economic reality will get average citizens and not just renewable energy zealots to engage in the process.
Paul Gessing is president of the Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.
On March 1, 2010, the unelected Environmental Improvement Board held a public comment session during which citizens were able to offer their comments to the Board on a proposal to limit carbon emissions in New Mexico to 25% below 1990 levels. Comments were limited to three minutes. I used my three minutes to demand recusal of three EIB members due to self-evident conflicts of interest.
Radical environmentalists have occasionally argued that the life of one member of an endangered species is worth more than the life of one member of the human race. Judging by the money it is spending on the Mexican wolf reintroduction program, federal and state governments seem to agree with this extremist viewpoint.
$400,000 per Wolf
Since the Mexican wolf reintroduction program was launched more than a decade ago, millions of dollars have been spent by the United States, Arizona and New Mexico governments. The goal was to reestablish a target population of 100 wolves in the mountainous areas of southwestern New Mexico and southeastern Arizona. By December 31, 2008, all the agencies participating in the reintroduction program—the U.S. Fish and Wildlife Service, the U.S. Department of Agriculture, and the New Mexico and Arizona game departments—estimate they had spent over $18.1 million in this effort. By the end of 2009, these agencies estimate that their total expenditures will be just under $20.5 million. Their exact projected figure is $20,479,088. And, of course, it will be higher ever year in the future.
According to the USFWS’ 2008 year-end survey, only 52 wolves were roaming the Arizona-New Mexico reintroduction area. Twenty-nine of these were wearing radio collars. Another 23 un-collared wolves were documented through visual monitoring and reporting.
A simple calculation shows that government spending on each wolf is just short of $400,000 ($393,828 to be precise). But the actual sum is higher.. The wolf reintroduction program does not include in its inter-agency expenditures the money spent by local governments responding to wolf attacks on livestock and pets, or threatening humans. Further, the actual wolf population as of June 30, 2009, has dropped with the loss of three radio-collared wolves, thus raising the per-wolf government expenditures above $400,000. That figure continues to rise each year as millions more (approximately $2.3 million a year) are spent on a program that is not producing increasing wolf numbers.
These figures also do not include the private costs of the wolf reintroduction project. Since its inception, wolf attacks on livestock and pets have stirred anger and controversy in the impacted communities. The exact losses to the agricultural industry have not yet been accurately tallied for the life of the wolf-reintroduction project. The last effort to calculate those costs was in 2005 and was subject to criticism by ranchers that the program was seriously underreporting livestock losses. The costs of pet losses—numerous attacks on dogs and horses, requiring sizable veterinary bills—have never been totaled.
Wolves Worth More to Government than Humans?
In response to the terrorist attacks on the World Trade Center and the Pentagon, Congress passed the 9/11 Victim’s Compensation Act. This law set the intrinsic value of a human life at $250,000. Higher sums were paid to compensate families for the lost incomes of a love one killed in the attacks. But the value of a human life itself, without regard to that person’s ability to earn money, was set at $250,000.
At $400,000 a wolf and rising, government is valuing the intrinsic value of each wolf more than its values the intrinsic value of human life. Residents in the affected areas have frequently complained that the government seems to care more about “El Lobo” than the human residents who must live with these powerful predators. With these figures, they can now point to government’s excessive and endless spending on wolves to prove their point.
Misinformed and misguided laws and policies affecting how New Mexico and the nation generate and use energy are in danger of being enacted. These policies will cost consumers money, hurt the state and national economies at a perilous time, and increase reliance on oil imports from countries that are hostile to America.
Unfortunately, the proposed laws and regulations largely are based on a “sound bite” approach rather than real knowledge of energy and the economy. Superficially, these plans sound good but the results would be just the opposite.
These elected and appointed officials appear to have developed their proposals for two reasons rather than a rational, “fact-based” methodology.
They appear motivated by an ideological dogma that “hydrocarbons are bad” and should be done away with via regulation and taxes or de facto prohibition. “Hydrocarbons” in layman’s terms means oil and natural gas, and coal. The supporters of “green” (aka “renewable”) energy are generally the same ones who have feeling of disgust (that’s not too strong a word for their sentiment) for the hydrocarbons like oil and gas, etc.
Based on the framework outlined above, New Mexicans and Americans need to be alert to the following:
The Obama Administration wants to single out America’s oil and gas companies and eliminate them, and only them, from a previously enacted tax law that encouraged U.S. industrial production. The Congressional Research Service late last year reported that the result of this change will be increased reliance on imported oil, rather than improved energy security as the administration says it wants. Such a narrowly-focused, punitive tax seems obviously based on a misguided attempt to discourage investment in oil production altogether.
Even the most promising estimates for renewable energy production foresee substantial reliance on traditional energy sources for decades to come. Pushing production overseas only reduces jobs, not our carbon footprint.
Leaders in the administration, both houses of Congress, Governor Richardson, et al, have jumped on the so-called “cap and trade” bandwagon as the favored way to reduce global warming. This, despite the fact that cap and trade has (a) not reduced CO2 emissions in Europe and (b) has been subject to “gaming the system” or outright corruption and fraud.
These problems have been brought to light by the U.S. Government Accountability Office (GAO), and by the United Nations which recently suspended clean energy project auditor in the European market. Even the environmental group, Friends of the Earth, is uneasy with the complexity of the proposed scheme.
According to Michelle Chan of Friends of the Earth, the cap and trade market “could take on the same characteristics as the mortgage derivatives market if investors are allowed to securitize emissions credits without strong regulatory oversight and enforcement…If we aren’t careful,’ she continues, ‘we could end up creating a massive, poorly regulated derivatives that not only poses risks to the broader financial markets, but also undermines efforts to save the climate.’
Finally, Governor Richardson is gung-ho for the Western Climate Initiative, a western-states climate “credit” exchange – a foolishly narrow attempt to solve a global problem that would nonetheless cost New Mexico as many as 4,689 net jobs, $1.2 billion in personal income, and $219 million in per capita disposable income according to a new study by the Beacon Hill Institute.
Congressional leaders and the Obama Administration seem poised to prevent oil and gas production along the Outer Continental Shelf (OCS), offshore along parts of the U.S. coastline. A recent study by the American Energy Alliance shows why outlawing OCS drilling would be contrary to our national interests: “With more than 85 billion barrels of recoverable oil and over 440 trillion cubic feet of natural gas located right off our shores, exploration in the OCS stands to contribute $273 billion annually to the national economy.” Not using this resource, like the tax provision repeal mentioned earlier, also would result in increased reliance on foreign oil imports.
It does not make sense to treat American energy resources as an enemy when our economy needs both the emerging “green, renewable” resources as well as existing hydrocarbon resources. Yet, the members of our congressional delegation have largely been silent on the proposed taxes and laws mentioned above. Only Congressman Harry Teague has stated publicly that America needs both renewable and traditional energy resources. Senator Jeff Bingaman, who exercises great power as the chairman of the Senate Energy Committee, has toed the party line along with Nancy Pelosi and Harry Reid in their ongoing assault on energy.
Paul Gessing is President of the Rio Grande Foundation; a non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.
Every special interest group that seeks to influence public policy pays lobbyists. There is nothing remarkable in that observation. Manufacturers, hospitals, insurance companies, banks, even churches pay lobbyists to transubstantiate their agenda into laws, money, and regulations. But some environmental groups in New Mexico have gone where no interest group has gone before. They have three elected officials directly on their payrolls.
Deanna Archuleta is Vice Chair of the Bernalillo County Board of Commissioners and Southwest Regional Manager for The Wilderness Society. State Representative Jeff Steinborn of Las Cruces is the Southern New Mexico Director for the New Mexico Wilderness Alliance (NMWA). Las Cruces City Councilor Nathan Small is also on NMWA’s payroll as a “wilderness protection organizer.”
The mission of these groups is to influence public policy to preserve wilderness and other public lands. Their work has expanded to include fighting the oil and gas industry as a general principle. Their fight against oil and gas drilling has taken them from the Rocky Mountains to the depths of the oceans.
The Wilderness Society has been one of the leaders in opposing opening the Outer Continental Shelf and areas in the Gulf of Mexico to energy exploration and production. NMWA has led the opposition to natural gas drilling in Otero Mesa, a sprawling desert emptiness on the Texas border. Blocking energy production in the Arctic National Wildlife Refuge has been at the top of the agenda for The Wilderness Society for a generation. Even though the Arctic plain is thousands of miles distant, with a climate, flora and fauna unlike anything in New Mexico, NMWA has joined that fight.
Both organizations want reintroduction of large predators in New Mexico, expansion of their range and restrictions on human activities that come in conflict with the animal’s needs and behavior. These groups have worked aggressively for reintroduction of wolves in southwest New Mexico. They also want to see reintroduction of the jaguar. The current executive director of NMWA has called for releasing grizzlies in New Mexico even though that might cause an “inconvenience” for human beings. Both organizations also participate in litigation to stop human activities, from recreation to natural resource extraction, which they deem contrary to the interests of selected wildlife species.
The programs of these organizations adversely impact the oil and gas revenues that constitute a third of the New Mexico state budget and support schools around the state. These organizations’ wildlife policies also place them into direct conflict with agriculture, one of the major employers and sources of income and taxes in rural New Mexico.
Opposition to developing ANWR, the OCS and other federally owned energy deposits has the added consequence of reducing federal revenues critical to New Mexico’s economy and contributes to the nation’s increasing dependence on foreign sources of oil.
The Wilderness Society has headquarters in Washington, D.C. It is a tax-exempt 501(c)(3) organization, meaning it does not pay taxes on its income. According to its 2006 report to the IRS, The Wilderness Society earned $37.5 million in income. It claimed assets of $53.9 million, including an investment portfolio of $27.6 million. Its top executive officer earned nearly $300,000. It has more than 85 employees who earn over $50,000, about twice the median income of a New Mexican family of four.
Though it is much smaller, NMWA has offices in Albuquerque, Las Cruces, Carlsbad and Santa Fe. Its budget in 2005 exceeded $750,000. Its 2006 budget was $427,000. Its executive director makes more than $50,000. Details on other staff salaries are not public information.
ETHICAL PROBLEMS OF ELECTED OFFICIALS WORKING FOR PRESSURE GROUPS
(a) Nondisclosure and Misleading Disclosure
Under state and federal law, a person paid to influence legislators and their staffs is required to register as a lobbyist, disclose their clients, and report gifts, meals and trips provided to legislators and staff.
Environmental groups, like industry groups, have teams of lobbyists that work Capitol Hill and the Roundhouse in Santa Fe. Certain New Mexico lobbyists, such as Gregory Green and Linda Siegel, specialize in representing environmental groups as part of a “progressive” advocacy practice. A search of lobbyist disclosure records reveals the identity of their clients. A search by organization, conversely, reveals the lobbyists each organization has retained.
No similar disclosure requirements apply to the three elected officials on the payrolls of The Wilderness Society and NMWA. The on-line legislative profile of Jeff Steinborn describes his occupation only as “land conservation.” That information is so inadequate it is misleading. The occupation of “land conservation” could equally apply to a range scientist working with ranchers and farmers. Much of the work of Steinborn’s employer, on the other hand, is intended to, or has the consequence of, adversely impacting agricultural activities. Steinborn’s employer’s idea of “land conservation” is removing land from all uses except sitting idle as wilderness.
Steinborn’s vague occupational description fails to reveal that he works in direct opposition to the state’s largest private employer, the oil and gas industry, and the largest single pillar upholding state government’s budget. NMWA fights the industry throughout the state. Sometimes those battles swirl around remote areas like Otero Mesa. But NMWA has also jumped into the fight to prevent oil drilling in the Galisteo Basin outside Santa Fe. This area has been so impacted by human activity—subdivisions, roads, utility corridors, mining—it would never qualify for wilderness designation.
NMWA also injects itself into controversies about oil and gas operating regulations. NMWA has endorsed tighter and more costly restrictions on oil and gas operations that, by their very nature, do not take place in wilderness but in existing production areas.
Neither Bernalillo County nor the City of Las Cruces requires very detailed financial disclosure information from elected officials. The nature of the employment of Archuleta and Small is not described on those governments’ websites.
Because so little information is publicly available about the work and financial interests of these public officials, the author e-mailed four questions to each of them at the address of their environmental employers. The questions were identical for each official:
1. What are your duties and responsibilities for The Wilderness Society [or NMWA]?
2. How do you separate your role as County Commissioner [State Representative, City Councilor] from your role as an employee of The Wilderness Society [or NMWA], particularly how do you prevent your public office and title from benefiting The Wilderness Society’s [or NMWA’s] work?
3. Do you perceive any conflicts of interest between the interests of The Wilderness Society [NMWA] and the interests of your constituents? If so, please explain.
4. What is your compensation from The Wilderness Society [NMWA]?
None of the officials would answer these questions.
(b) Separating the Special Interest from the Public Interest
The New Mexico State Legislature is a volunteer legislative body. Legislators receive only a per diem while in session or performing committee work between sessions. Their occupations range from lawyer to rancher. Many are educators. Many are retired. A few work for non-profit organizations or tribal governments.
No legislator but Steinborn works for an organization whose sole reason for existence is to influence public policy and law through political action, grassroots pressure and lobbying.
Bernalillo County pays commissioners just under $30,000 for what is supposed to be a part-time job, but sometimes balloons into a full-time calling. The Commissioners have other jobs in real estate, broadcasting and education. None but Archuleta works for an organization that exists to bend governmental policy to serve its organizational objectives.
The Las Cruces City Council is composed of volunteers. Only Small is employed by an organization that also lobbies the Council.
Other legislators have occupations and trades. Why does it matter that these elected officials work for organizations that exist to influence governmental action and policy?
Consider more closely Nathan Small’s dual role as a Las Cruces City Councilor and a “wilderness protection organizer.” He and Steinborn have spearheaded a multi-year, costly campaign by NMWA to persuade Congress and the President to designate about 400,000 acres surrounding Las Cruces as federal wilderness and National Conservation Areas. The wilderness designation is the most forceful tool in the preservationist’s toolbox. It imposes the most stringent, sweeping restrictions of any federal conservation measure. No building or road construction may occur and no motorized vehicles or mechanical equipment may be used in wilderness. Flood control authorities may not use bulldozers, the lame cannot use wheelchairs, and policemen would have to get out of their vehicles and chase on foot or horseback a criminal driving—illegally—into a wilderness area. The implications of these restrictions for life in a large urban area have triggered opposition from the Chamber of Commerce, community leaders, off-road vehicle recreationists, and law enforcement.
One of the strategies of the campaign directed by Small and Steinborn has been to seek endorsements from local governments to demonstrate for Congress local support for the wilderness proposal. Before Small was elected, he lobbied the City Council to win its endorsement for wilderness. Since Small’s election, opposition to wilderness has exploded and the Council is being asked to join other local governments in reversing its position. The Las Cruces City Council has yet to schedule that vote.
During City Council consideration of any matters involving wilderness, Small makes a show of excusing himself. But a theatrical departure from chambers cannot completely insulate council from his influence. Legislation is a process of compromise, negotiations, trading favors and storing up payback. At some point, a fellow council member will need Small’s support on a close vote for roads, sewers, playgrounds and public improvements in their council district. Legislators remember favors granted and favors denied. Small may be out of the room when wilderness is being discussed, but he is never out of the picture.
Tom Cooper of Las Cruces is co-chair of People for Preserving Our Western Heritage, a coalition of ranchers, industry organizations, and hundreds of businesses opposed to NMWA’s wilderness proposal. Does Small’s recusal from chambers while wilderness is being discussed satisfy Cooper? “Absolutely not,” Cooper says. “It is difficult to take seriously. He constantly works on wilderness. That’s his job. We’ve been told many times he works behind the scenes.”
A second problem is that the elected office and title held by these individuals cannot help but benefit their employers.
Small cannot seem to keep his NMWA role separate from his official duties when he is in the public eye. He led a rally on June 24, 2008 in support of the wilderness proposal. The story earned a banner across the top of the front page of the Las Cruces Sun-News. Small’s photo occupied the upper right hand corner. He was identified as a city councilor speaking in support of wilderness.
Hatch is an agricultural village in Dona Ana County north of Las Cruces. Small sought support for NMWA’s campaign from its village trustees and chamber of commerce. He was identified in those proceedings as a Las Cruces City Councilor. Hatch Village Trustee David Sment says he did not know Small was being paid by NMWA until sometime afterwards.
Then there is the battle over Otero Mesa.
Otero Mesa is located about 150 miles east of Las Cruces, across the Organ Mountains, White Sands Missile Range, and tens of thousands of acres of other federal land. It can only be reached by rough roads with a well-earned reputation for destroying tires, as this author has personally experienced. Otero Mesa contains large groundwater reserves that are currently being tapped for agriculture across the border in Dell City, Texas. The El Paso metropolitan area is the most likely recipient of that groundwater if it is ever mined for municipal use.
Ranching is the sole industry on Otero Mesa. This shadeless, windy steppe offers little recreational value to a distant urban population. It has no developed visitor sites, campgrounds or trails. If you visit Otero Mesa, bring your own water. The only potable water is inside the few isolated ranch houses. A person who comes unprepared will have to decide if they are thirsty enough to slurp the muck from earthen stock tanks.
Since Small’s election, the Las Cruces City Council has discovered Otero Mesa. This year City Council voted to endorse NMWA’s proposal to block gas exploration and production in Otero Mesa.
Bob Gallagher, President of the New Mexico Oil and Gas Association, points to the curious interest of the Las Cruces Council in an empty patch of New Mexico in another county as evidence that Small’s status as a city councilor is being exploited by NMWA. Except for the fact that Small is a member of that body, asks Gallagher, “What the hell does the Las Cruces City Council have to do with whether some gas drilling takes place on Otero Mesa?”
Gallagher also points to Steinborn’s record of fighting his industry in the State Legislature and the administrative agencies of New Mexico government. “I don’t think it’s right that Steinborn is a legislator employed by NMWA. It has absolutely hurt our ability to work with the Legislature. Every day I hear from legislators who don’t want to cross him by supporting our industry, or I receive warnings that he’ll somehow use his office to hurt us.”
Kent Evans, a Dona Ana County Commissioner, is challenging Steinborn for his seat in the New Mexico House of Representatives. “To me,” says Evans, Steinborn’s employment “is an issue. He’s trying to pretend he doesn’t work for an environmental group. It is a clear conflict of interest. He has a definite agenda, and that is forcing wilderness on the community.”
“And,” continues Evans, “just the fact that he works for the wilderness group is enough. It is clear where he’s coming from, who pays him, and where his interests lie.”
In researching this report, inquiries were made as to whether any industry advocacy group has any elected official on their payroll. No elected official on the payroll of an industry advocacy group could be identified. Gallagher says he’s never heard of it. Michelle Frost of the New Mexico Cattle Growers/New Mexico Wool Grower’s Association laughed. “We have only two people on staff, period. Me and our executive director.”
Coincidental or not, every one of the elected officials on the payroll of these environmental groups is a Democrat.
By placing on their payroll politicians with no other significant source of income, these environmental groups can effectively subsidize a political career. As that career advances, the politician is in a better position to repay, if not simply remember, who their patron has been.
U.S. Senator James Inhofe of Oklahoma, the ranking member on the Senate Environment and Public Works Committee, released in September 2008 a report on the increasingly indistinct lines between tax-exempt environmental organizations and prohibited partisan political activity. Entitled, “Political Activity of Environmental Groups and Their Supporting Organizations,” the report details the myriad creative ways environmental organizations have been using tax-exempt money to engage in electoral politics. New Mexico may be on the cutting edge of a disturbing new development in this area.
Jim Scarantino is an investigative reporter with the Rio Grande Foundation. A nationally recognized political columnist, Scarantino appears as a regular panelist on KNME-TV’s weekly public affairs program, “In Focus”. Scarantino also was executive director of The New Mexico Wilderness Alliance in 2003 and served as Chair of the Coalition for New Mexico Wilderness from 2000 to 2004
Imagine if your corner gas station had to obtain government approval every time it raised or lowered the price of a gallon of unleaded. While that may seem like a great way to keep gas prices low, in reality, such policies, enacted as a result of OPEC’s embargo, caused the long gas lines of the 1970s. Thus, a situation that would have seen price increases and subsequent conservation on the part of consumers instead resulted in gas not being available at all.
Indeed, as Nobel Award-winning economist Friedrich A. Hayek pointed out decades ago, government-run economies are doomed to failure because governments don’t have enough information to make pricing decisions in a marketplace.
The situation relating to PNM and its recent difficulty in obtaining rate increases from the Public Regulation Commission is not altogether different. Energy prices have risen dramatically in recent years while at the same time PNM has been forced to invest in wind and solar in order to fulfill state-mandated renewable energy standards 10 percent of our electricity must come from these “renewables” by 2011. But rates have not risen for 20 years.
The Rio Grande Foundation is by no means a shill for PNM, though. In fact, the organization does not take a position one way or another on PNM’s proposed 14.7 percent base rate increase or any other change in the rates charged by the utility. Instead, we’d like to see a competitive marketplace in which PNM is just one of many utilities competing to provide the best service at the lowest price.
Unfortunately, until New Mexico deregulates its utilities to the point that consumers can choose their utility and utilities can adjust their rates without the approval of the government, this will not occur.
While painted as a boon for utilities, true deregulation would actually be most beneficial for consumers. For starters, it would encourage more efficient pricing, thus leading to lower prices in the long term. Building new power plants costs millions and even a billion or more dollars depending on the type. Yet, much of this power is necessary only when electricity usage rises to “peak” levels on hot days when businesses and homes are running their air conditioning and otherwise using maximum power.
PNM has begun to address this issue with its “Power Saver program,” which offers financial incentives for consumers to cut back electricity usage at peak times. This program is one market-friendly way to cut costs by eliminating the need for future power plants. Of course, this is also good for the environment. While PNM is finally rolling this program out, other utilities have gone far beyond it in terms of improving efficiency and cutting costs.
Among the most innovative utilities operating in the deregulated state of Maryland, Baltimore Gas and Electric recently began an efficiency/conservation program that will generate $42 million in revenue for the utility over the next thee years by enabling the company to identify outages more quickly and bill customers based on more accurate information. Ultimately, the utility hopes to avoid having to invest in additional power plants until absolutely necessary.
Dynamic pricing expands on PNM’s “Power Saver Program” by allowing the utility to raise prices during peak times and reducing prices during off-peak times. Through the use of market incentives, consumers would be encouraged to shift their energy usage to those days and hours when prices are lowest. Since power plants run 24 hours a day with off-peak power often going to waste, using incentives to shift usage is good for consumers, utilities, and the environment.
At this point, there is no way to tell if PNM’s rate hike request is economically justified because the utility is not operating in anything resembling a market. However, it is clear that we’d all be better off if the political process were replaced with economic decisions made by utility customers. Only then will we know if rate hikes are justified or the result of poor management.
Paul Gessing is president of the Rio Grande Foundation, a research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.
In most places in the United States, including New Mexico, oil and gas discovered on one’s land would be seen as a blessing, and in fact large fortunes have been made through surface leases and royalties. After all, oil and gas have been integral to our daily lives for more than a century and will remain so for the foreseeable future.
Eventually, economically viable (i.e. without government subsidies) alternative forms of energy might be found, but until then, oil and gas production benefits not only industry investors and company shareholders, but workers, landowners and government coffers.
Unfortunately, the fact that oil and gas drilling in the Galisteo Basin is even being considered by Houston-based Tecton Energy has caused an ill-informed but vocal group of anti-growth activists to protest that Tecton might make a profit on a venture in which they are willing to invest their own capital despite a significant risk of failure. If they do not succeed in their quest, only they and their investors lose: If successful, everyone wins.
Before we run Tecton out of town and the Galisteo Basin is shut off from future exploration, let’s look at the real issues, free of emotion. We all benefit from oil and gas production, from fuel for our automobiles, to fuel for the trucks that deliver food and other products to local stores. Beyond transportation, plastics used by everyone are hydrocarbon-based.
Clean-burning natural gas is used for home heating and provides
18 percent of America’s electricity generation, a number which is growing rapidly. Gas is really today’s clean, alternative energy source, but more is needed to offset declining U.S. production. Perhaps the Galisteo Basin will yield gas as well as oil — only drilling will tell.
Since Santa Fe County has no production yet, its residents benefit from long-established reserves in places like Farmington, Hobbs, Artesia and Roswell. If it is acceptable there, why are Santa Fe residents so against drilling in the Galisteo Basin? An old adage in the oil business is simply “oil is where you find it.” In other words, we cannot dictate where Mother Nature and the ancient processes of geology created it. The Galisteo Basin just might be one of those favored places!
Part of the issue is undoubtedly the fact that the median household income in Santa Fe is in excess of $42,000, while in San Juan County the number is $34,000, in Chaves County it is $28,500, and in Lea County the figure is $30,000.
To an objective outsider it would seem that for some local opponents of oil and gas production, such activities are fine for the folks in the northwestern and southeastern parts of the state, but heavy industry should be kept out of their sight. Many oppose exploration and production based on environmental concerns, primarily on the perceived threat of damage to fresh water aquifers.
This is a valid concern, but standard industry practice entails installing steel casing through aquifers that are usually shallower and separate from the objective oil and gas zones. Thus, the aquifers are sealed off from any contamination. Modern technology will utilize centralized drilling and production pads, limiting wellheads and facilities to a small footprint.
If the residents of the Galisteo Basin are so committed to preventing exploration of legally acquired surface and mineral rights, they and any other sincere residents of Santa Fe should form a consortium to buy those rights from Tecton and forego the rewards of potential oil production. They could even sell the water to Santa Fe, as a value will have been placed on that valuable commodity!
As residents of New Mexico, a state that is reliant for a greater percentage of its budget on severance taxes than all but Alaska and Wyoming, we benefit from the largesse that oil and gas revenue brings to the state. Before stopping drilling in Galisteo Basin, we should look at the pluses and not just the perceived minuses of drilling.
Santa Fe County resident James B. Taylor serves the Río Grande Foundation as an adviser on oil and gas issues.
Jason Marks, the State Public Regulation Commissioner from the Albuquerque district, recently authored an article criticizing the vote by Congress, and specifically New Mexico Senator Pete Domenici, which would allow the current renewable energy tax credits to expire in 2008 as was determined when they were passed years ago. Unfortunately, Mr. Marks did not take into consideration all the issues at hand.
To begin with, we must recognize that alternative and renewable fuels are not in a race with traditional fossil-fuels as a means to provide energy for our current needs and those of the upcoming generations. They are both integral components of our long-range energy future.
It must also be noted that the renewable energy tax credits were tied directly to the passage of over $13 billion in new energy taxes to be levied upon our domestic energy producers. These new taxes would have dramatic negative economic consequences here in New Mexico and across our nation as they would be passed directly down to us all in the form of higher prices for gasoline, home heating oil and in the costs of general goods and services.
This would have come at a time when the costs of energy are at or near all-time highs, and when our economy is under a great strain and facing what many fear will be a recession. These higher costs-of-living would be especially difficult for individuals and families who are struggling simply to make ends meet and could be the last straw for businesses that are already under siege by higher costs, slowing demand and competition from global trade.
New energy taxes were proposed chiefly as a means to punish domestic energy companies for lingering high world energy prices over which they have no control. Yet, in their zeal to pacify angry voters, backers of this proposal overlooked the important ways in which higher energy taxes would harm our nation and our economy by further increasing American dependence on foreign oil.
Obviously, massive new taxes and disincentives for production will only make domestically produced energy more expensive than imported supplies. The net result of this is an overall decrease in domestic output and greater dependence on production by others; the polar opposite of our national goals.
Perhaps most dangerous for our nation in these times of great political unrest is the fact that higher energy taxes for domestic producers put our U.S. energy companies at a severe competitive disadvantage with state and foreign-owned companies worldwide. These entities control much of the world’s known energy reserves and are increasingly reluctant to allow us to participate. America faces growing risks of source-nationalism, limited access and infrastructure constraints at every turn. Taxes that limit energy companies’ ability to participate worldwide or reduce their incentive to develop greater domestic output are against our national interests.
The development of increasing pools of traditional energy and new sources of alternative and renewable power are not mutually exclusive goals, as Mr. Marks seems to believe. There is no reason to pit one against the other, nor is there any ambiguity in Senator Domenici’s past support of alternative and renewable energy coupled with his recent vote against new energy taxes. These are equally valid steps toward a continued search for answers to our national energy dilemma.
Paul Gessing is President of the Rio Grande Foundation; a non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.