Sparks flying over Pa.'s energy future

HARRISBURG - While energy is a leading national issue, and congressional approval of a major energy-conservation package appears imminent, Pennsylvania's energy initiative is bogged down in political and philosophical disputes.

When he announced his Energy Independence Strategy 10 months ago, Gov. Rendell promoted it as a plan that would be all things to all people: It would help reduce dependence on Middle East oil producers, cut pollution, save consumers money, conserve energy, and improve the economy, he said.

The core component was an $850 million plan to fund a wide range of alternative-energy and conservation initiatives through borrowing and electricity-usage fees.

But state Republican leaders and business leaders rejected its reliance on a new fee on homeowners (averaging $5 a year) and businesses (capped for the largest industrial users at $10,000 annually) to pay for what many considered unproven technologies and costly conservation programs.

Last week, just before the holiday break, the Republican-controlled Senate passed a scaled-down and fee-free version of Rendell's plan. But without House action, the energy effort remains unresolved heading into the new year.

"The action in the Senate . . . was helpful in that it was action," Rendell said. "But the package doesn't go far enough to secure Pennsylvania's position as a leading state in alternative-energy production."

Senate Republican leaders pointed to their $650 million Alternative Energy Investment Act as an aggressive approach toward developing alternative-energy sources without tapping taxpayers.

Sen. Mary Jo White (R., Venango), the GOP bill's sponsor and chairwoman of the Environmental Resources and Energy Committee, said that "we've met our commitment to the governor" by approving an energy-funding bill and biofuels legislation with bipartisan support.

White's bill calls for rolling out millions of dollars in loans, grants and tax incentives to consumers and businesses over 10 years, compared with the three- to five-year frame for Rendell's plan.

The battle over energy funding reveals deep ideological differences between the Republicans in the legislature, who have drawn a no-tax/no-borrow line in the sand, and Rendell, who believes that residents and businesses are willing to pay in the short run for long-term savings.

Rendell and some environmental groups said the Senate plan would do too little over too long a period.

With electricity rate caps set to begin to be lifted at the end of 2009, they said, there is urgency to get conservation measures in place. Increased competition for "green" companies from other states could hurt Pennsylvania's economy down the road, they added.

"New Jersey and New York each are spending $200 million a year," said John Hanger, president of PennFuture, a statewide environmental advocacy group. "We need at least $150 million a year or we're not going to be a competitor in locating clean-energy producers here."

A spokesman for White said the 10-year funding commitment would sustain action well beyond the end of Rendell's term in 2011.

"The governor wants to bond the entire amount of his plan and spend it over three years for one reason - so he can spend it all during his tenure," said Patrick Henderson, White's chief of staff.

The Senate last week also passed two environmentally friendly fuel bills, one to require adding biodiesel to every gallon of diesel oil sold in Pennsylvania and another to provide a biodiesel subsidy of 75 cents a gallon at a cost of about $5 million.

But there is no ethanol component for gasoline-fueled vehicles in the Senate bill, an omission that Rendell said was unacceptable.

"I will veto any bill that does not contain ethanol," he said last week.

Rendell's energy plan would require every gallon of gasoline sold in the state to include 10 percent ethanol by 2017 and every gallon of diesel to include an increasing amount, up to 20 percent, of soy or other renewable oil.

Critics say ethanol has contributed to higher corn prices and has high transportation costs, but environmentalists counter that it's the best available "transitional" fuel until the development of more cost-effective "cellulosic" ethanol, which can be made from wood chips and agricultural waste.

Rendell also criticized a provision in the bill that would extend $25 million in grants to help coal-fired power plants meet stricter federal and state regulations on mercury and other pollutants.

Rendell wants that eliminated, and overall spending in the GOP bill hiked.

"He'd like to see the energy fund increased such that an investment pool actually spurs investment, and he is concerned the bill rewards polluters for not polluting," said Rendell's spokesman, Chuck Ardo. "He said he would compromise, not capitulate."

Henderson said Senate Republicans were prepared for further negotiations, but remained opposed to additional borrowing or new fees.

"We welcome both the input of the governor and the House," he said, "but caution that any financing must come from existing revenues."