MNCEF Response to Center of the American Experiment Post

By Mike Franklin

Yesterday, the Center of the American Experiment warned its followers to “not be fooled” by the Minnesota Conservative Energy Forum. We’re not sure what they mean by “fooled,” as our message has been particularly clear regarding our mission to inject free market forces into Minnesota’s energy economy. In particular, our wish to achieve our state goal of cleaner and cheaper energy. If one reads between the lines, one might conclude that the “correct” position for a conservative is to limited to promoting oil and coal – at any cost. Thankfully for Minnesotans, energy sources and the electrons they generate have no ideological preference. The author is wrong (and decidedly non-conservative) if the goal is to pick winners and losers among energy generation technologies. This is especially so where, as here, there is a potential to change the entire energy debate by going a step deeper and challenge the current narrative by applying conservative principles.

Since the author is new to the conversation, I would like to officially welcome him to the 2018 debate on energy in Minnesota. We’re happy to help orient him, and the Center of the American Experiment (CAE), away from an argument based on outdated data, instead discussing more relevant political and policy discussions around energy in our state.

MNCEF was founded in 2016, founded on conservative principles to educate our fellow conservatives on the rapidly evolving energy industry. Specifically, our aim is to promote free market energy generation policies, and to encourage the development of an “all of the above” energy strategy. We believe “cleaner and cheaper” is possible via markets and competition, as we are starting to see in many other states. We further believe that Minnesota, and the conservative movement in particular, is better off if we equip activists, candidates, and elected officials with tools to increase support, create more choices for ratepayers, and more freedom for energy generation. The contrary vision is one in which conservatives are stuck defending specific technologies, rather than letting the marketplace select winners and losers.  Hopefully, this is not the limit of CAE’s vision.

When the author completes his research on the relevant discussions in 2018, he will find that MnCEF has been and will continue to be skeptical about the past and continued use of mandates or subsidies to promote politically favored technologies. This isn’t to say there is never a place for such tools (as they have been used for virtually every energy source we could imagine). But as far as offering support for industries that could not succeed on their own, we share CAE’s opinion.  We, however, would apply that standard to all technologies and not just wind energy.

In addition, our Leadership Council is full of highly respected conservative intellectuals, former elected officials, current staffers, and energy industry veterans who put forth a program based on conservative principles. Indeed, some are themselves CAE veterans. MNCEF supports renewable energy as part of an “all of the above” energy mix, and are enthusiastic about these technologies’ potential to disrupt an economy in the same way as new technologies forced the reconsideration of our telecommunications monopolies a generation or two ago.

By the way – our positions are supported by enormous swaths of conservative voters – not just as reflected in recent polling, but in past Minnesota research and in most other states. Fighting windmills is not a winning issue, either here or elsewhere, especially when the data also show that unsubsidized wind energy is a cost effective resource. We hope that CAE will join us in trying to expand conservative circles instead of trying to diminish or question the motives of potential partners like MnCEF.

As mentioned, last month, we commissioned a poll from Public Opinion Strategies, a highly respected polling firm that has previously done work for the Minnesota Republican Party, Senator Norm Coleman, Representative John Kline, the Minnesota Family Council and the Minnesota Action Network, to say nothing of their many conservative clients nationwide. Their reputation is sterling. The polling results were unambiguous in support of our message in contested districts, and we have publicly posted the results on our website. We welcome a public discussion on what these results mean for the conservative movement in Minnesota.

While we respect CAE’s research, we want to challenge many of CAE’s conclusions from their blog post in order to provide conservatives with relevant facts that will help change energy policy in Minnesota – and would likely also change CAE’s proposed conclusions.

  1. Minnesota might not need energy today, but it will in a decade.

 

Yes, Minnesota currently doesn’t need to add large assets to the grid to serve customers in 2018. But the Center fails to alert supporters of the near-term, and immense, resource needs in the state. In its 2019 Integrated Resource Plan, Xcel Energy intends to discuss retiring its Sherco, King, Monticello and Prairie Island facilities as they reach the end of their licenses and facility viability. This will require over 1000 MWh of replacement assets in the coming twenty years, well within the horizon of current policy discussion.

This is the time to address ways to inject the free market into determining which energy sources will replace this lost generating capacity.  In 10 years, it will be too late.  And, this is the time to begin challenging the narrative that this transition must be done in a centrally planned and mandated way, without concern for risk allocation or economic competitiveness. That discussion is occurring today at the state capitol and at the Public Utilities Commission. Fighting wind energy is…well…quixotic. If the technology was expensive and unreliable a decade ago, those days are gone – and wind has become a mature technology.

  1. Fossil fuels are abundant, that doesn’t mean new generation is cheap.

 

MNCEF was pleased to learn about the oil resources still available to Minnesotans. However, we were confused as to what that had to do with Minnesota’s electricity market, since petroleum isn’t used for electricity generation in this state. To the extent that coal is also plentiful, it isn’t cheap, especially if one assumes the cost of new construction. We believe CAE makes a good point about the cost of new wind generation, but we challenge them to also be honest about the cost that come with any new energy source. Based on our poll, Republicans want a diverse – and clean – energy mix, and it is now possible to provide cleaner energy sources without sacrificing on costs. Studies, including this one by Lazard, have long concluded that wind energy is now cost competitive with fossil fuels without subsidies. Further, states like Iowa have invested much more heavily in wind energy than Minnesota and currently have lower average rates. When other states can install cheap wind, the obvious conclusion is that the energy source can’t be the problem. We invite CAE to join us on challenging decisions by legislators, regulators, and utilities that have driven our costs out of the top-five best to worse than the national average.

  1. CAE appears to have a selective approach to government energy subsidies.

 

It’s hardly newsworthy to point out that renewable energy enjoys generous tax credits. But, they’re hardly alone. However, unlike other technologies, these subsidies have been reduced and will end by 2020. The author is an expert in hydraulic fracturing, so he surely knows that the federal government spent billions in subsidies and tax breaks on “fracking” to develop the industry. In fact, despite being a mature industry, fossil fuels still receive tax credits and subsidies based in statute, which means unlike renewable energy subsidies those will never sunset. Nuclear energy, too, enjoys subsidies on par with those afforded to renewables. Unlike renewables, however, those subsidies have done little to control the massive, skyrocketing costs of new construction. Indeed, in Minnesota this session, our largest utility is seeking to protect its shareholders from economic risk associated with nuclear maintenance – an issue on which we haven’t heard CAE opine.

So, all this said – we have more in common than not. Or at least, we ought to.

MNCEF is disappointed that CAE doesn’t view the energy sector the same way it views transportation, education, or health care. In each of those, CAE has done admirable work to promote free enterprise, attack monopolies like the Metropolitan Council, challenge the Public School establishment including teachers’ unions, and protecting taxpayers in Minnesota.

Conservatives are left with several questions:

  • Why have we seen no Center of the American Experiment opposition to utilities seeking billion-dollar ratepayer-funded “guarantees” before the Legislature?  Does CAE support this?
  • Why does Center of the American Experiment defend monopolies and regulators in the energy sector when there are opportunities to introduce free market solutions?
  • Why does Center of the American Experiment oppose private property rights of businesses, farmers and homeowners assuming their own risk by building distributed energy resources?
  • Please better define for us how Center of the American Experiment attributes a specific ideology to different energy sources.

 

All of these questions illustrate our befuddlement in the Center’s recent broadside.

We believe that there is broad based support for our conservative, free market, more choice energy market. Bills in recent sessions (Bahr, Albright) to increase energy choices for businesses in Minnesota have gone uncommented on by the supposed free-market forces at CAE.

We are going to keep working to press conservative principles and continue to grow our conservative coalition. We welcome the Center to join us and fight for these principles, because there are always opponents to free markets and energy choices. In so doing, CAE would be more relevant and helpful to conservative policymakers looking for advice and leadership on the questions they are actually facing today.

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