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EDITORIAL
Econ 101?
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Government economics sure are weird.
Imagine you go to the grocery store and the manager tries to convince you to pay $8 for a gallon of milk -- twice the usual price.
"But wait," he says. "I'll give you a $4 rebate for the gallon of milk, which drops the price to an affordable $4."
That sounds better. But where did the other four dollars come from?
"This is Shifty, our pickpocket. He slipped it out of your pocket as you came in. Look at it this way. I'm going to use this $4 from Shifty to subsidize someone's purchase of an $8 gallon of milk today. If you don't take the deal, I'm just going to offer it to someone else."
Which brings us to the Clark County School District.
The district plans to "invest" $4 million of your tax dollars in rooftop solar panels for as many as 20 local schools. The hope is that the photovoltaic cells may save the district $190,000 per year on its electric bills for the next 20 years -- the expected lifetime of the panels.
Do the math. The savings (even if the optimistic estimates prove accurate) won't repay the set-up costs.
But wait! The school district expects to get $1.44 million in federal stimulus funds as a reward once the first five schools are outfitted. Then, the district has been promised $1.2 million in rebate checks from NV Energy, the local electric monopoly, also upon completion of the first five installations.
Why, the district could get up to $5 million in one-time rebate checks once all 20 schools hook up their electric systems. What a savings to taxpayers!
Or is it? Don't the federal "stimulus funds" come, in the end, from the same taxpayers? And the NV Energy "rebates" -- won't the same taxpayers end up covering those costs when they pay their own home electric bills? So how is this any different from the store manager promising to "subsidize" your purchase of an $8 gallon of milk with $4 that Shifty already picked out of your other pocket?
We're also told the photovoltaic panels are more affordable now, since more are being manufactured even as demand drops due to the recession.
That's weird. Why would anyone be manufacturing more of these things even as demand drops? Are we paying additional, hidden tax subsidies for those manufacturers?
Then, as an added benefit of this scheme, the main contractors, Helix Electric and Bombard Renewable Energy, contend the project will either "keep 50 people from being laid off" or "bring people who had been laid off back to work," as electricians are paid above the prevailing wage -- roughly $50 an hour -- to perform these installations. In the process, many of those workers will receive specialized training in installing photovoltaic paneling. This is "a fantastic skill to have on the resume," enthuses Earl Ward, district manager for Helix Electric.
Wait a minute. These workers are going to be learning how to do this? They're going to be trainees? And the trainees are going to be paid more than $50 an hour?
Go read Frederic Bastiat's "What Is Seen and What Is Not Seen." How many minimum-wage private-sector jobs could have been sustained if those dollars had been left in the pockets of Southern Nevada taxpayers to spend on goods and services they might rather have spent them on?
Meantime, with hundreds of thousands of Nevadans unemployed and looking for work, we're supposed to believe the school district couldn't have found trainees willing to learn how to install photovoltaic cells for less than $50 an hour?
Yep. Government economics sure are weird.
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Pretty much every solar panel in the state that is not part of a generating station (like Solar Star at Nellis) is selling any unused power back under a net metering agreement. You would be correct to observe that each Kwh of power on the grid from that more expensive generating source drives up the average cost of power across the portfolio. That will continue to be the case until the magical day when solar costs less that other sources - but again - it's a public policy decision - or a Harry Reid strongarm in the case of shutting down a perfectly good coal power project at Ely that would have cut the emissions for those millions of megawatt hours by 3/4.
For any small business/private/school PV owner, the economics have no chance of working out to their benefit without a net metering provision. The only entity for which that would work is one that has a consistent load during daylight hours, 365 days per year. The schools sell back pretty much all of their summer peak hour generation to the grid, at the exact time of year when the grid can most use the added capacity. Again, from the parochial installer owner point of view, if the one time rebate offsets all of the up front costs, you're in the green from day one. The rebates are not for power generation, they are what the system owner gets for giving up future rights to "Greentags" (renewable energy credits).
John F,
If it does, then highlight the line in the editorial that says this. I've read it a few times and cannot find where it says what you say it says. What section are you quoting? The only quote you've given talks about installation rebates, not paying for generated energy.
By the way, it does say that the money saved by the solar panels is supposed to be $190,000 per year. That $190,000 represents the power generated. The editorial admits this savings to the taxpayer and simply says that the $3.8M that it will generate in 20 years won't offset the initial $4M investment. This is the only place in the editorial that the costs/benefits of generated energy is mentioned.
-- Jeff
Ahhh, but it does. The editorial states that the installation of the solar panels won't be a savings to taxpayers because taxpayers will still have to bear the cost of the electricity the CCSD sells back to NV Energy. But we will be paying for that electricity REGARDLESS. Are you using less electricity now than you will once the solar panels are installed?
What you all are missing is that the parochial economic interests of the school district, and the public policy issues surrounding green energy and its promotion by the Federal and State Government, are not necessarily inseparable. Commentor's mix the two and miss the point. As a fan of Bastiat, as well as of Henry Hazlett, Milton Freidman, Ayn Rand, Murray Rothbard and even Ludwig Von Mises, let me paraphrase one of the precepts of Friedrich Hayek – which is that Government should set reasonable and clear rules, and then get out of the way of private decision makers. Though CCSD is obviously not private, in this case they are pursuing a no-brainer option just as you would at your home, based on the public policy previously set by the elected Government, at both State and National levels. That decision was to accept (as if there was a choice) $1.44M in Federal Stimulus funds (stolen from your grandchildren) and to take $5/watt of available one-time rebates (approved by the Nevada legislature as the “Solar Generations program”- payable on system start up) and combine them to install PV that will save the district on its future energy bills, and provide a hedge against future price increases (which will be huge if Cap and Tax passes) - all at no net cost to the district. The ROI on that is infinite from the parochial point of view. TINSTAAFL is the unavoidable economic rule, so yes the cost of these rebates will shouldered by all of us in our future power bills – about .5 cents per month per family, supposedly. Any power generated but not used will be sold back to the grid under net metering provisions.
John F,
I don't see where you get that statement from the editorial. The only rebates mentioned in the editorial are installation rebates, not from power generation. What is your source for your statement? Further, if the source isn't in this editorial, then you are mis-characterizing the editorial. Your argument against the editorial doesn't make sense because the editorial doesn't say what you claim it says.
-- Jeff
zteccc,
The statement should have read "[t]he rebates from NV Energy will be for excess electricity generated by the solar panels which CCSD will then sell to back to the utility." The idea is that the solar panels will generate more electricity than the schools can use. The schools will then sell that electricity to NV Energy. NV Energy will, in turn, sell that electricity to us. The editors make it sound as though our purchase of that electricity will somehow be an additional cost over and above what we are already paying. It won't be, of course. As for using the purchase of that electricity as an excuse for charging higher rates, when has NV Energy ever been at a loss for reasons why they should charge us more? My point is, the editors are lying when they say that the purchase of that excess electricity from CCSD by NV Energy will cause consumers to pay more for electricity than they would otherwise.
It astonishing how this type of twisted mathematical logic is being constantly used to foment anti-government attitudes. Using perverse interpretations of every action of this administration's policies compels you to consistently leave out many variables in your actuarial debunking campaign. You are quite right 1+1 does not equal 3. But one +1+1+1 Does equal 3! Our independence from fossil fuels that enrich other countries is a Economic and National Security imperative!
John F,
The editor didn't say that it would cost more to pay for electricity produced by the school district solar panels than from other sources. The editor merely stated that the rebates and stimulus funds are paid for by taxpayers and consumers, the stimulus is paid for by taxes (debt actually) and the rebates will be an operating cost that NV Energy will use as justification for higher rates (undoubtedly).
Read your post below, you said that "[t]he rebates from NV Energy will be for excess electricity generated by the solar panels which NV Energy will then sell to back to the utility." This statement isn't accurate. The rebates, as I posted, are for installation of the panels which is a different issue than the power purchased by NV Energy after the panels are operational.
-- Jeff
zteccc, I was not referring to the editors' statement about the tax rebates. They will cost taxpayers money, no doubt. I disagree with the editors, however, about the wisdom of that investment. I believe this represents an exellent use of taxpayer dollars as solar energy will replace energy generated by coal or oil. As for my point about the money CCSD will receive from NV Energy, you are correct, NV Energy will sell the electricity they purchase for more than they pay for it, but they will also buy it for less than it costs them to produce it. We won't end up paying higher electrical rates as a result of the transaction. The editors' contention that we will is utter hogwash.
John F,
You are correct that NV Energy will pay the school district for the power generated by the panels in the same fashion that it pays any provider of electricity when it buys from a coal plant, wind farm or other generator. It is still true, nonetheless, that the consumer will pay for that energy when they pay their home electric bills. NV Energy isn't going to take a loss on that power they pay for, they simply charge the consumer for it. As to it saving the taxpayers money, either you're suggesting that they'll pay less than prevailing rates to the school district for the power they generate, or there's no way they can save the taxpayers money. Regardless of what they pay, the amount of power generated and paid for is already calculated into the 20 year ROI for these solar panels.
The rebates that you refer to in your quote are not repayments for power generation at all. They are instead installation rebates that NV Energy provides upon completion of the install (see http://bit.ly/aPKrBb ). Since they are not based on power generation (and not subject to the regulations preventing NV Energy from overcharging for the power they purchase), they are simply an operating cost that must be passed on to consumers (e.g. taxpayers), unless you really think that NV Energy is going to take a loss on those rebates.
-- Jeff