Wolf's Destructive Electricity Tax is Now Official

May 03, 2022 10:06 PM | Rebecca Oyler (Administrator)

PMTA is providing the update below on the Department of Environmental Protection's (DEP's) now-final Regional Greenhouse Gas Initiative (RGGI) from the Pennsylvania Manufacturers' Association. Though energy costs are important to all businesses, as trucking companies move further to electric and no-emissions vehicles, policies related to the cost of electricity are even more critical. PMTA will continue to track challenges to RGGI and will update members as appropriate. 

Wolf’s destructive electricity tax is now official

Despite rising inflation, sluggish pandemic recovery, war in Europe, and global supply chain struggles, Governor Wolf is going into overdrive to impose his crippling electricity tax, which became official last week.

Wolf’s go-it-alone effort started with an executive order in October 2019, which called for Pennsylvania’s entry into a multi-state compact of 11 Northeastern and Mid-Atlantic states, the Regional Greenhouse Gas Initiative (RGGI). The final rule was published in the Pennsylvania Bulletin on April 23 after two-and-a-half years of intense public scrutiny, and damning assessments from business, organized labor, and consumer groups, as well as opposition from a large bipartisan majority of state lawmakers.

The RGGI cartel requires power plants to pay a tax for each ton of carbon dioxide they emit. A report by the Independent Fiscal Office (IFO) said Pennsylvania electricity generators could spend upwards of $781 million annually on emissions credits at the RGGI auctions, nearly four times the amount the Wolf administration used when rolling out the RGGI scheme in 2020. The IFO also warned lawmakers that “those costs would be pushed through to final customers.”

The RGGI electricity tax will also force the closure of older power plants, even though those plants are fully compliant with all DEP and EPA regulations. Because Pennsylvania is the top electricity exporting state in America, those plant closures could destabilize the electrical grid for the entire PJM market serving thirteen states and the District of Columbia.

Lawmakers from both parties tried numerous times and in different ways to block Wolf’s plan. The most recent being an attempt earlier this month by the Senate earlier to override a Wolf veto of a concurrent resolution (SCRRR1) to stop RGGI. The two-thirds majority required for override failed by one vote.

Unless the plan is stopped in court -- a critical hearing in the Commonwealth Court that could delay it, is set for Monday -- Pennsylvania is looking at the potential loss of over 20,000 jobs, and a 30 percent jump in electricity rates for consumers and businesses. Almost all emission reductions will be reimported from Ohio and West Virginia (both outside RGGI), when electricity production moves to those neighboring states. Governor Wolf has not yet shared any plans to redirect the Jet Stream from its current west-to-east path.

“Pennsylvania should be a national energy leader, supercharging our economy and lowering monthly bills for consumers,” said PMA President & CEO David N. Taylor. “Instead, under Governor Wolf’s RGGI cartel, Pennsylvanians will have more expensive energy, more inflation from higher business costs, and fewer good-paying jobs for our skilled tradesmen and power plant workers. Because all taxing authority rests with the General Assembly, Wolf’s RGGI tax is unconstitutional. PMA looks forward to vindicating that principle in court.”

Power generators could begin paying the fees required for entry into the compact starting July 1st unless the Commonwealth Court acts to at least delay implementation. It did delay publication of the rule in the Pennsylvania Bulletin, but that brief expired on April 18.

The broader argument before the court is that the governor has enacted a tax without legislative approval; the Constitution authorizes only the General Assembly to enact or raise taxes.

With a victory in the Commonwealth Court, the fight will almost certainly end up in the state Supreme Court, predicts state Sen. Gene Yaw (R-Lycoming), chairman of the Senate Environmental Resources & Energy Committee, and a vocal opponent of the plan.

“What [Wolf’s] doing is handing over our economic and environmental future to 11 other states,” Yaw said. “But he seems hell-bent on getting us into this.”

“I wish more people understood how serious this really is,” he added. “That consumers are going to get hit hard from both sides.”

The hope is that court actions can delay implementation until a new Governor is elected in November, assuming, of course, that the new Governor supports leaving the compact. All Republican candidates have stated their opposition, and even the lone Democratic candidate, Attorney General Josh Shapiro, has expressed reservations about RGGI in a bid to retain support from organized labor.

In Virginia, newly elected Gov. Glenn Youngkin, a Republican, has vowed to remove his state from RGGI. There, the Democratically controlled legislature approved entry, so he and Republican lawmakers are trying a variety of strategies to get the state out. A new Pennsylvania Governor could withdraw with a simple executive order because the legislature never approved, or was even asked to approve, Wolf’s plan.

Pennsylvania electricity generators support tens of thousands of high paying jobs and provide millions in additional tax revenue. Wolf’s RGGI tax and the Biden Administration’s continued attacks on domestic energy production have those generators on the ropes. President Biden’s climate envoy John Kerry recently said that “no one should make it easy for gas interests to be building out 30- or 40-year infrastructure.”

By next January, Wolf will be gone, and the November elections will reveal what consumers think about the Radical Greens’ destructive anti-energy agenda.

Pennsylvania Manufacturers’ Association | (717) 232-0737 | 225 State Street, Harrisburg, PA 17101


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