New power generation projects in Pennsylvania collapsed because of uncertainty caused by the state’s 2019 carbon tax, while at the same time neighboring Ohio saw a 33% increase in new power projects, according to a report released Monday from the Commonwealth Foundation in partnership with National Taxpayers Union.
This made the Commonwealth less attractive to economic development projects, like data centers, that could have benefitted Pennsylvania taxpayers.
Although Pennsylvania repealed its carbon tax last year, new similar proposals from state leaders continue the regulatory uncertainty. The unpredictability blocks investors from bringing much-needed new power supply to the grid to reduce energy prices for ratepayers and power promising new technology that will boost economic growth.
The research is a case study that is important for state policy makers everywhere.
“Pennsylvania is the most energy-rich state in the nation, but it has been handcuffed by ill-conceived ideas that force ordinary people with power bills to pay the price,” Pete Sepp, President of National Taxpayers Union said. ”Our research outlines the smartest way for Pennsylvania and every state to reduce energy prices and encourage the economic boom from the information age and data centers that could enrich Pennsylvanians, and all Americans.”
The report provides detailed policy solutions lawmakers nationwide should follow:
- Reduce or even freeze renewable mandates
- Establish more transparent energy load forecasting
- Protect ratepayers through cost allocation
- Pursue permit relief for all generation types
- Enable co-location and private development agreements
- Say no to burdensome, discriminatory carbon taxes
- Avoid picking business winners and losers
“Restrictions on reliable and affordable generation supply destroy opportunities for all businesses, especially a sector where electricity is a major input of production,” according to the report, which was written by Commonwealth Foundation policy analyst Joshua Schubert. “The general welfare of Americans is at stake when policies hostile to affordable energy drive up costs in all industries.”
The report highlights the difference in new power generation outcomes between Ohio and Pennsylvania.
The two states share key characteristics, including the same regional transmission organization (PJM), access to shale gas, comparable coal to gas fuel transition, and the same wholesale electricity market commodity prices and federal regulations.
But, during the six years when Pennsylvania had a carbon tax in place, projects in that state declined 38%, while Ohio’s rose 33%, amounting to a 71 point swing in investment momentum between the neighboring states.
“A vital response to rising energy prices is hooking up more supply to the grid,” Sepp said. “If Pennsylvania and other states embrace the economic growth and opportunity brought by data centers and new technology, taxpayers can see relief from heavy property and other tax burdens. The fastest path toward abundance is the regulatory reform and other policies outlined in this paper.”
Read more research from National Taxpayers Union on data centers and how taxpayers can profit from new technology.
National Taxpayers Union is the only free-market organization for taxpayers that unites effective advocacy with useful research about how to limit taxes, spending, and regulation at every level and branch of government—state, federal, administrative, and judicial.