A NEW POWER STRUGGLE
By Bob Confer
If you’re a regular reader of this column you know that
the high cost of electricity is a recurring theme. As someone whose company
is a heavy power user, I can’t help but rail against New York’s exorbitant
cost structure and its adverse impact on economic development.
That said, you’d think I’d be delighted about Governor Andrew Cuomo’s
Recharge New York program. Well, I’m not.
Cuomo mentioned this initiative in his budget proposal. It would replace the
outdated and broken Power For Jobs (PFJ) program that provides low-cost
electricity to 500 businesses. It would grant some semblance of cost
certainty to the affected firms by making the program permanent unlike PFJ,
which has been renewed on an annual basis since 2005. They would also
receive their allocations for 7 years at a time.
So far so good. But, things start to get tricky with the expansion of the
program. Cuomo’s proposal would double the current PFJ “budget” from 455 to
Where will that power come from? You.
That newfound 455-megawatt block is currently used to cut upstate
residential power bills by an average of $3 per month. To most elected
officials that may not sound like a princely sum. But, over a year’s time
that could be $36. That’s big money to any couple trying to raise a family
or any senior on a fixed income when gas, food, and taxes keep going up with
no end in sight.
Sadly, it’s a widely held belief by those same officials and corporate
leaders that the block of power would have a greater economic impact in the
hands of businesses. That same argument was presented during the relicensing
of the Niagara Power Project, which is why not one state-level politician
fought for John and Jane Doe’s utility bills during the process.
That’s a really poor belief for a couple of reasons. For starters, every
economy needs 2 things, creators and consumers. Both should be equal in the
eyes of the markets and neither party should be granted favor over the other
or have their purchasing power minimized by the invisible hand of
government. Secondly, there is no greater economic incentive than putting
money in the hands of the consumer. You’re guaranteed homeowners spend the
power savings that they now have available. Collectively, that’s big money
being pumped into the economy. In Niagara and Erie Counties alone that’s
$21.6 million per year.
The Governor has attempted to lessen Recharge New York’s blow by saying that
it will be equalized by the 2014 phase-out of a tax levied on your power,
known as the incremental state assessment. He failed to say that tax is
relatively new, having just gone into effect on July 1, 2009. Slated to have
a 5-year life span, it was one of the state’s ways to “balance the budget”.
That tax was just under $3 on my home bill last month.
If we follow Cuomo’s logic, it’s a wash. But is it? Under Recharge New York,
cheap power and its $3 savings that we’ve had for quite some time will be
taken away from us forever. Within a few years, though, we’ll have back
another $3 that was rightly ours until only recently. I don’t know about
you, but it seems like we’d be losing $6 per month (or $72/year) until 2014
and after that we’d be losing $3 per month.
When the government takes away such a benefit to the people and gives it to
businesses it has the same impact as a tax (your government-influenced cost
of living increases), so it may as well be called one. That begs the
question, is it morally and economically prudent to charge a tax upon
families so they can prop up businesses? The answer should be a resounding
So, if you’re pennywise and value any savings you can get, especially with
other taxes –like school taxes - certain to go through the roof this year,
make it a point to write your senator and assemblyperson and ask that they
stop Recharge New York and keep it from taking a charge out of your
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