VIDEO STREAM: Virginia Energy Consumer Conference

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THURSDAY, SEP. 16,  9:30 AM – 11:30 AM EDT.

*If you don’t see the video stream yet, refresh this page after 9:30 am on Thurs, Sept. 16.

*If you don’t see the video stream yet, refresh this page after 9:30 am on Thurs, Sept. 16.

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A Promise to Reverse Northam’s Tax Hikes

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Republican nominee for governor Glenn Youngkin is proposing to reduce Virginia taxes in much the same way Governor Ralph Northam has raised them:  Several individual proposals, some not all that large, which accumulate into a significant change.

As Northam ends his term, his attitude seems to be, what tax increases?  He claims the current $2.6 billion general fund revenue surplus and the almost $400 million transportation fund revenue surplus are due to economic growth.

No. Tax increases greatly contributed to that surplus and will keep the Commonwealth’s coffers overflowing. Youngkin’s proposal tracks those tax hikes and softens their individual blows.

A change in sales tax collections, imposing the tax on more out-of-state shippers just as online retail exploded, contributed to both surpluses.  Youngkin proposes to counter that by removing the sales tax on groceries. Exempting them from tax has been a long-time goal of some in both parties, especially former Democratic Governor Douglas Wilder.  Northam had promised it.

After the 2017 federal Tax Cuts and Jobs Act pushed the federal standard deduction to $25,000, millions of Virginians gave up taking state itemized deductions in order to enjoy that higher federal deduction. That one change produced the largest piece of the bonanza of additional state revenue that politicians are now plotting to spend in January.

So Youngkin proposes to increase the state standard deduction to $9,000 for an individual and $18,000 for a married couple.  That will take hundreds of thousands of taxpayers entirely off the income tax rolls and provide a significant reduction for the millions who use the standard deduction — $518 per year for married filers.

It is something the Thomas Jefferson Institute recommended three years ago, and legislators in both parties have previously proposed higher standard deductions. Over the long term, this is by far the largest of the tax cuts proposed by Youngkin and best for the economy.

The surplus in transportation accounts was created by 2020 legislation which raised the gasoline tax by 17.6 cents per gallon in some parts of Virginia, 10 cents per gallon in others, and then created a new highway user fee imposed on vehicle registrations.

Youngkin’s proposal for a one-year suspension of the most recent 5 cent gas tax increase won’t save taxpayers much, but it does remind Virginians about the major 2020 tax increase under Northam, little noticed as gasoline prices fluctuate.

More surplus revenue came from the unfortunate decision this year to impose income tax on the federal Paycheck Protection Program and state Rebuild Virginia Grants.  Under pressure from the Thomas Jefferson Institute and others, the Assembly exempted the first $100,000 in grants from tax.  Youngkin proposes to exempt it all.

His list of proposals includes a $40,000 exclusion for military retiree pay.  Also one-time individual rebates of $300 per person or $600 per couple, larger than the 2019 rebates of $110 each that Northam and the legislature agreed to in pretending to return that year’s surplus.

The other truly major tax idea is related to the wave of inflation which is following the massive federal COVID relief spending.  Real estate values are already exploding all across Virginia.

Higher house values produce higher real estate taxes unless local governments lower tax rates.  To capture the inflation-driven tax increase now, it takes a simple vote by the governing body.  Youngkin would add the requirement for a voter referendum in those instances.

The complaints about that from local officials in both parties will be quick and loud, and this idea might produce the largest legislative battle.  Former Republican Governor Jim Gilmore also sought to rein in a local tax, the car tax, and had only mixed success.  People still pay a portion of that tax.

Most voters who remember that battle 20 years ago blame the Assembly for the tax surviving, not the former governor.  They may appreciate the next governor making a similar push on another out-of-control local tax.

A version of this commentary originally appeared in the September 2, 2021 edition of The Fredericksburg Free Lance-Star.  Stephen D. Haner is Senior Fellow with the Thomas Jefferson Institute for Public Policy.

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Could Vineyard Wind Challenge Impact Dominion’s Virginia Project?

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A group of Nantucket Island, Massachusetts residents have filed suit challenging the pre-construction environmental review on a massive offshore wind complex planned off its shores. The issues raised may have a direct impact on the similar wind energy project planned off Virginia Beach, which is only now beginning its environmental impact process.

A loose coalition of offshore wind opponents is forming from North Carolina to New England to the Great Lakes to question or challenge the expanding list of proposed projects. The Thomas Jefferson Institute for Public Policy has affiliated with the coalition, with our concerns over Dominion Energy Virginia’s proposed 5,280 megawatt project basically economic.

One of the key organizers of the broad coalition and this Nantucket lawsuit, David Stevenson of the Caesar Rodney Institute in Delaware, will be speaking at the Virginia Energy Consumer Conference on September 16 outside Richmond. Thomas Jefferson Institute is one of the three sponsors. The full conference will be available through streaming (details to follow.)

The umbrella group is using the name “Coalition for Ocean Protection and Safety.” The Nantucket group, playing off the code designation for its local airport, call themselves ACK RATS, with the RATS standing for Residents Against Turbines. The wind developments there are not 27 miles offshore the way it is planned in Virginia.

“Some people oppose the industrial offshore development because it will harm their ocean view. Some people oppose it because it will result in higher electricity rates. Some will oppose it because it will hurt commercial fishing,” stated Val Oliver, co-founder of ACK Rats, in a prepared media statement.

“While those are all valid and true concerns, what motivates us in our opposition to the industrial offshore development is the fact that it will result in the destruction of our ocean floor, its ecosystem, and have a deadly impact to countless bugs, birds, bats, fish, and the critically endangered North Atlantic Right Whale. Saving those species, and especially the critically endangered Right Whale is why we are here today,” Oliver continued.

“The whales belong to all of us and with fewer than 400, of which there are fewer than 100 breeding females left, each one is worth protecting. The people of Nantucket have a long history with these whales, and we have done so much recently to protect this species. It would be a tragedy to see all of them lost in order to build an industrial offshore development,” stated Mary Chalke, co-founder of ACK Rats.

With its Environmental Impact Statement (EIS) still in the early stage, the Dominion project already has the enthusiastic endorsement of the Biden Administration, Virginia Governor Ralph Northam and the Democrats in control of the General Assembly. Threats to any whales probably won’t shake that. But if the Vineyard Wind EIS fails a federal court review because it was rushed and flawed, that likely will add roadblocks to the Virginia project.

The suit challenges the Bureau of Ocean Energy Management (BOEM) as having failed to comply with the National Environmental Policy Act and the Endangered Species Act.

“Despite preparing an Environmental Impact Statement (EIS) and a Supplement to the EIS (SEIS), BOEM failed to take the requisite “hard look” at the Vineyard Wind project’s adverse impacts on whales and other marine mammals, fish, sea turtles, birds, air quality, greenhouse gas emissions, cultural resources, aesthetics, and other resource categories. BOEM’s two NEPA documents also failed to examine a legally adequate range of alternatives; failed to mitigate the project’s impacts; and grossly underreported the project’s cumulative effects,” the opening summary states.

The suit reads like and cites complaints similar to those in legal challenges to natural gas pipeline projects in Virginia, some of the projects now abandoned. Any successful federal court precedents established in those cases on reversing permit approvals may apply here.

Vineyard Wind LLC submitted a construction and operation plan to BOEM in 2017, seeking to erect 100 turbines about fourteen miles offshore from Nantucket and neighboring Martha’s Vineyard. Plans are in place to expand to other adjoining lease areas and build a total of 600 650-foot-tall turbines in that region.

The Dominion project, which Wednesday announced its formal lease of Port of Virginia space to use as a staging area, plans to produce 2,600 megawatts of energy from its first phase. Massive world-wide economic forces are behind this push, most of them positioned to earn substantial profits from energy ratepayers.

The Virginia State Corporation Commission, basically under orders from the General Assembly to approve the offshore wind proposed by Dominion, has estimated the all-in consumer cost of the Dominion project at more than $37 billion. It accounts for about a third of the $807 annual increase in residential electric bills the SCC has projected by 2030, with the power provided dependent on unreliable wind.

The five-turbine, 30 megawatt Block Island wind project off Rhode Island currently has four of its five turbines off-line as the manufacturer inspects for the kind of stress fractures which are appearing in similar units in Europe. Block Island has been operational on windy days since 2016, but recently the turbines were remaining still on those windy days and some newspaper finally asked why.

 

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New Electricity Tax is Leading Edge of Rising Energy Costs

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Next month, Dominion Energy Virginia customers will begin paying Virginia’s first direct carbon tax on their bills. The amount they pay to buy carbon dioxide allowances from the Regional Greenhouse Gas Initiative will not be listed on the bill separately but will produce a noticeable bump in price.

Not long after, another energy-related tax will be added to customer bills for both Dominion and Appalachian Power Company customers. This one, tiny at first but destined to grow, will create a fund to subsidize the electric bills of low income customers. If high use produces a big bill, above a level tied to their income, they will owe only part of it and the fund covers the rest.

Meaning you will help pay their bill. You will never see the words “Percentage of Income Payment Program” on the billing sheet, but you will start paying it soon. Legislation in 2021 capped the program at $125 million per year but that can and will be changed.

Both of these bill additions, each a tax per kilowatt hour, flow from recent State Corporation Commission decisions. Don’t blame the SCC. The General Assembly created both, just the leading edge of the wave of rising energy costs coming to Virginia.

Many but not all flow from the 2020 Virginia Clean Economy Act, a state level “green new deal” intended to end all use of coal or natural gas for making electricity by 2050. Other new laws are setting similarly aggressive goals for eliminating motor fuels and reducing fossil fuel use in home appliances and even agriculture.

Democrats openly promised to do all this if voters put them in charge. It is safe to assume more will be done in this direction if they stay in charge after November’s elections.

The SCC took one more recent step important in this transformation, starting the application and review process on Dominion Energy’s proposed offshore wind project 27 miles off Virginia Beach. That was the centerpiece of the 2020 VCEA, with the General Assembly all but ordering the SCC to approve up to 5,200 megawatts of offshore wind and dump the cost on its ratepayers.

The potential $37 billion all-in cost of the wind project will be the main reason for the huge electricity price spike that is coming. The SCC has issued warnings of 50 to 60 percent price increases in a relatively short period. When that wave hits, quite a few Virginians will be turning to that PIPP fund to cap their bills at a reasonable level. The rest of us will wish we could.

The carbon tax for RGGI will start at $2.39 for every 1,000 kWh of electricity use, for any kind of customers – residential, commercial, or industrial. Dominion will use the $170 million it collects annual to buy carbon allowances, and the money paid flows to state spending programs. According to the SCC order imposing the tax it could cost customers $3 billion over a couple of decades. Expect more.

One of the SCC judges, former Virginia Attorney General Judith Jagdmann, challenged the need for the RGGI tax. Writing her own version of the order on the tax, which was not something she could stop, she pointed to another part of the 2020 VCEA. It orders Dominion to stop all use of coal or gas by 2045. RGGI simply aims to reduce the use by 30 percent or so.

“The VCEA plainly states that the (Renewable Portfolio Standard) program requirements for Dominion shall be 100% by 2045. Thus, it remains unclear whether the significant cost required for participation in an additional cap-and-trade program – which is expected to cost customers billions of dollars – are necessary for Dominion’s and Appalachian’s ratepayers to bear in order to achieve the General Assembly’s carbon reduction objectives,” she wrote.

Jagdmann called RGGI and the RPS provisions “duplications.” They are not redundant if you understand the real purpose of Virginia’s participation in RGGI, which is the tax revenue. Money. It will give the government billions of dollars to spend, using a nearly invisible tax source. There was some discussion of the money flowing back to customers as bill credits. The General Assembly scotched that.

Once again, low-income Virginians are supposed to be direct beneficiaries, with RGGI dollars used to pay for energy-reduction home improvements.

This energy transformation has been largely under the radar for most Virginians, and it is not an accident that most of the costs will begin to arrive after the 2021, 2022 and even the 2023 elections. When discussed at all, the cost is obscured by claims that these steps are necessary to prevent a world-wide catastrophe from carbon emissions.

But as Jadgmann quietly underlined with judicial understatement, the program is riddled with duplications and contradictions. The wind application when dissected will demonstrate a massive profit motive at work for both utilities and the wind energy industry, eager to crush its fossil fuel and even nuclear competitors.

A disappointing note to close on: Jadgmann’s voice was a lonely one. The other two commissioners, both elected by the Democratic majorities in power since 2020, chose not to join her and kept those comments out of the main body of the ruling. The cost and duplications may not trouble them as much as they do her.

Stephen D. Haner is Senior Fellow at the Thomas Jefferson Institute for Public Policy. He may be reached at steve@thomasjeffersoninst.org.

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Ready to Spend $26,000 to Eliminate Your Gas Appliances?

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Maybe not today or tomorrow, but soon the War on Fossil Fuels will be fought in the equipment room or garage of your house. A push to prohibit new natural gas connections and remove existing home gas services is inevitable if Virginia’s current leaders are serious about zero carbon emissions within 20 to 30 years.

Refitting a home with natural gas appliances to all-electric, the dream of some utilities who need not be named, is likely to cost well over $20,000. That figure has been helpfully compiled in a state-by-state analysis by the Consumer Energy Alliance (CEA), with a fact sheet specifically on Virginia. It reads in part:

An energy ban could cost as much as $26,132 for a Richmond household to retrofit existing appliances. depending on the appliance models, home configuration, labor, and reliance on natural gas. These findings dovetail with previous CEA research that found that the cost to replace major gas appliances in homes nationwide would be more than $258 billion. Further, as the report shows, a tremendous amount of new transmission infrastructure will need to be built at significant cost to Virginians to meet the demands to “electrify everything.”

One third of Virginia’s homes use natural gas for heat. The largest part of the conversion expense would be replacing gas heat with electric, which CEA estimated would cost $20,000 (and with all the labor and if you need ductwork, it could).

Then the CEA review adds in the cost of an electric hot water heater and range, plus the cost to upgrade your electric service to at least 200 amps. That decorative gas log fireplace in the family room? Forget about that. Gas is used in some clothes dryers, and propane is also a popular fuel choice. In a zero-carbon- emissions world, they must go.

The advocates of these pie-in-the-sky energy transformation promises, either at the federal level or here in Richmond, never own up to the consumer costs. They shy away from discussing how much that Transportation and Climate Initiative will tax motor fuels, how much the Regional Greenhouse Gas Initiative is going to add to electric bills, and the massive capital expense behind the Virginia Clean Economy Act.

No Virginia locality has been proposing this, but elsewhere (California, Washington) it has been adopted by local governments. The issue is also active in three of the Regional Greenhouse Gas Initiative states in the Northeast. Virginia, now a RGGI state, cannot be far behind.

Nineteen U.S. states have passed a ban on these bans, prohibiting such local ordinances, according to an S&P Global article. The map used as illustration above shows them. A recent Wall Street Journal article discussed how California restaurant chefs are fighting to keep their gas stoves.

In Great Britain it is a national effort, with the government pushing to replace 600,000 gas and oil boilers per year by 2028, but anti-CO2 activists are pushing for 900,000, according to an article in The Telegraph cited by the website wattsupwiththat.com. There people are waking up to the billions of pounds it will cost.

Maybe you will wake up when you get the order to rip out the gas furnace and buy a heat pump. Or when your old water heater dies, and you are told you cannot use gas or propane anymore but must go electric. “Who says so?” you will yell, and you will learn the foundation was laid by the Virginia General Assembly in 2020 and 2021. (“…net-zero emission by 2045 in all sectors, including the electric power, transportation, industrial, agricultural, building, and infrastructure…”)

One candidate for governor this year, Democrat Terry McAuliffe, is promising to accelerate the transformation schedules already on the books.

The CEA analysis also taps into Princeton University’s Net Zero America data on what this planned energy transformation will do to the transmission and distribution grids, also a cost which will come your way as consumers. The total national investment works out to $12,000 per household. Specific Virginia predictions from Princeton are on page 5 of the CEA report about Virginia.

If you doubt this will show up on your doorstep, remember that the Atlantic Coast Pipeline was crushed by Virginia opponents, a fairly minor capital upgrade proposed for existing pipelines in existing rights of way to serve Hampton Roads was killed, and the battle over the Mountain Valley Pipeline rages on. This is a war on fossil fuels, every single one you use in your daily life.

The future cost of the electricity that may soon be mandatory for your home appliances and personal car? That’s another story.

This commentary originally appeared August 4, 2021 in the online Bacon’s Rebellion.

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