The Florida legislative session has ended for 2011, which will give Gov. Rick Scott and legislators on both sides of the aisle a welcome opportunity to lick their wounds. The debate over how to cut the state’s unsustainable $3 billion annual budget deficit has been a bruising affair, resulting in unprecedented anger, fear, bitterness and frustration throughout the state.
Ironically, none of these painful budget decisions and rancorous debates should have been necessary. Florida’s budget could easily have afforded tax cuts and sustained spending levels if state regulators weren’t forcing expensive energy on state consumers.
Electricity sales in Florida totaled $25.8 billion in 2009, the latest year for which the U.S. Energy Information Administration has published annual statistics. EIA data also show that Floridians pay significantly higher electricity prices than our regional neighbors do.
Electricity prices in Florida averaged 11.49 cents per kilowatt hour, but prices averaged only 8.85 cents in Mississippi, 8.83 cents in Alabama, 8.81 cents in Georgia and 7.06 cents in Louisiana.
Had the price of electricity in Florida been the same as in Georgia, Floridians would have saved $6 billion during 2009 alone. Had the price of electricity in Florida been the same as in Louisiana, Floridians would have saved $10 billion in 2009.
If the extra money that Floridians paid for electricity vis-à-vis our regional neighbors had been collected as taxes instead, we would not be facing the painful dilemma of cutting government programs or raising taxes. Instead, we would not have to cut any government spending programs to balance the state budget, and we could additionally give tax rebates of $3 billion to $7 billion each year. That equates to an average of $400 to $1,000 in tax refunds per household each year while sustaining all of our current government spending programs.
It is no accident that electricity prices are so high in Florida. Inexpensive coal powers nearly half the nation’s electricity — but only 25 percent of electricity in Florida. That is why we pay so much more for electricity than do our regional neighbors and the nation as a whole.
The decision to keep inexpensive coal power out of Florida has been no accident, either. The Florida Public Service Commission, which has a legal obligation to pursue low-cost electricity for state consumers, has nevertheless aggressively blocked coal power production while championing and approving far more expensive wind and solar power.
For example, the PSC in 2007 rejected a proposal for an environmentally state-of-the-art coal power plant in Glades County, basing its decision on “uncertainty associated with future natural-gas and coal prices.” Soon thereafter, the PSC approved multiple solar photovoltaic power plants across the state.
So how do the costs of coal and natural-gas power compare with solar photovoltaic power?
According to the Energy Information Administration, the expected levelized cost of electricity from newly constructed coal-fired power plants is $100 per megawatt hour. For natural-gas power plants, the cost is $79. For solar photovoltaic, the cost is $396.
So the Florida PSC blocked a coal-fired power plant over alleged cost concerns but then approved several solar power projects that will force us to pay four times as much for our electricity.
The five PSC commissioners are appointed by the governor and subject to the approval of the state Senate. If Rick Scott and the Florida legislature are serious about reducing energy costs, keeping taxes down and balancing the state budget, they will ensure that new PSC appointees are strongly committed to inexpensive energy sources rather than appallingly expensive alternative sources such as solar power.
James M. Taylor, a Manatee County resident, is senior fellow for environment policy at the Heartland Institute.