The Pickens Scam
By: John Bender
T. Boon Pickens is causing quite a stir with his radio and television commercials hawking wind power for generating electricity and natural gas to replace gasoline to power our cars. Leftists are swooning over the commercials and some of the Republican talk show hosts are treating Pickensâ€™ idea seriously. But had the talk show hosts done some minimal due diligence they would know that there is more here than what Pickens tells people in his thirty second spots.
You see Pickens has gambled the bulk of his net worth on building a wind farm in West Texas. Had any of these talkers bothered to do a quick search on the Internet, they would have also found out that Texas power transmission companies are spending 4.93 billion dollars to build power transmission lines to Pickensâ€™ and other investorsâ€™ wind farms. The power companies will generate that money by adding $4.00 a month to every residential customerâ€™s electric bill. The electric companies estimate that the lines will not be completed until 2013, but given the track record of Texas power companies in building new infrastructure, that estimate is wildly optimistic.
A little checking would have also revealed that wind generated electricity is not as reliable as other forms of electricity generation. Surges from large wind gusts have caused trouble in various places around the country and just a few months ago a lack of wind in West Texas caused a major disruption in the Texas power grid. Wind power just isnâ€™t reliable.
It isnâ€™t cheap either. Wind is heavily subsidized by the taxpayers. On a per kilowatt hour basis, wind is the most heavily subsidized source of electric power in the nation. For one thing the federal production tax credit (PTC) currently gives a wind farm owner a tax credit of 1.9 cents for every kilowatt-hour of a privately owned wind turbine’s production for ten years. This is a credit, not a deduction, and it can be passed through to reduce the taxes owed by the owner for other investments or businesses. Congress also gave wind farms a double-declining accelerated depreciation which means an investor can recoup 2/3 of their investment in a very short time.
On top of these subsidies some states have mandated that electric companies meet a â€œRenewable Portfolio Standardâ€ (RPS) by a certain date. The U.S. Department of Energy says this about RPS:
â€œA renewable portfolio standard is a state policy that requires electricity providers to obtain a minimum percentage of their power from renewable energy resources by a certain date. Currently there are 24 states plus the District of Columbia that have RPS policies in place. Together these states account for more than half of the electricity sales in the United States.
Four other states, Illinois, Missouri, Virginia, and Vermont, have nonbinding goals for adoption of renewable energy instead of an RPS.â€
These mandates mean that the wind farms will be able to charge two or three times what a coal powered or a nuclear powered plant would charge. The electric companies will not be able to shop the price. The law mandates they buy so much electricity from a â€œrenewable sourceâ€ whether or not that source is priced competitively. On top of all this, the power generated by wind canâ€™t be increased and decreased as demand varies so unlike coal, nuclear, or natural gas generated electricity, most of the highly subsidized wind generated electricity will be wasted in the electricity grid’s spinning reserves.
The wind industry is lobbying very hard for a federally mandated RPS. Since they canâ€™t compete in a free market these mandate are crucial to their survival.
The U.S. Department of Energy’s Energy Information Administration, estimates that if the renewable production tax credit is extended to 2015, there will be 42,000 1.5 MW or larger wind turbines installed in the United States by 2025. They optically estimate that these windmills would generate only 3.7 percent of the United States’ electricity demand in 2025.
Coal, nuclear, and natural gas generated electric power doesnâ€™t require anywhere near this level of subsidy. Nor will they take 17 years to generate a puny 3.7 percent of the United Statesâ€™ electricity demand. All three are domestic, plentiful, cheap, and far more efficient than wind.
Mr. Pickens invested in an industry that cannot stand on its own in the market place. It needs taxpayer dollars, government mandates and other subsidies to make it pay. His commercials are an attempt to fool the gullible into supporting more handouts to him and others who gambled on that scam. He needs the taxpayers of the country to make his investment profitable. His commercials are a blatant attempt to get the taxpayers to demand their politicians continue to subsidize an industry that isnâ€™t competitive and cannot survive on its own merits. So far it seems to be working.
John Bender is a freelance writer living in Dallas. He is a past staff writer for EtherZone and his column has appeared in various print and Internet publications.