The Locker Room

July 31, 2009

North Carolinians Should Pay Extra to "Help" Texas

Posted by Daren Bakst at 5:54 PM

Two years ago, I wrote the following (slightly edited):

SB 3, the hastily enacted energy bill would require state citizens to help pay the electricity bill for Texans, Californians, or other out-of-state individuals.

Since there is not enough renewable energy in the state, SB 3 allows utilities to buy what are called renewable energy certificates that promote investment in renewable energy in other states, without providing electricity to North Carolinians.

In today's Raleigh News & Observer, an article discusses this issue:

With the first deadlines fast approaching for North Carolina's renewable energy targets, power companies in this state are snapping up green certificates from out-of-state wind farms. The certificates don't buy electricity, but pay for credits needed to meet state targets....

Texas is the nation's leading state in wind energy development, and provides some of the cheapest renewable certificates in the nation. Progress Energy, Duke Energy and a group of 19 municipal power agencies have already bought certificates from Texas wind farms to help meet North Carolina's green energy mandates, which start phasing in in 2012 and increase through 2021.

They [Renewable energy credits] are a subsidy to help clean energy producers make a profit.

You are reading this right.  The legislature is forcing North Carolinians to pay extra for electricity so that we can make sure renewable energy providers make a profit and we can subsidize the electricity of Texans.

I concluded my report in 2007 by writing:

North Carolinians will be mandated by its own legislature to pay for public services in other states. In the future, one has to wonder if North Carolinians will be paying for roads in Wyoming, schools in Tennessee, and other public projects that do not benefit the state.


I want to clarify something: SB 3 allows utilities to meet 25% of the 12.5% renewable energy and energy efficiency mandate (REPS) through these certificates.

The renewable energy requirement is 7.5%.  This means that about 42% of the renewable energy requirement can be met through these certificates.  The following is confusing, but to show my work: 25% of 12.5% is 3.125%.  3.125% is 41.7% of 7.5%.

So about 42% of the renewable energy requirement can be met by paying for the electricity of Texans.

Hurts Renewable Energy Development in the States

The N & O article discusses how some argue that these out-of-state electricity purchases may hurt the development of the renewable energy industry in NC.

1) The certificates exist because we don't have the renewable energy resources to meet a 7.5% requirement.  LaCapra, the Utility Commission's own consultant, recommended a 5% requirement, but the legislature ignored this.

2) The implied argument is we should pay as much as necessary to help the renewable energy industry.  Utilities aren't buying out-of-state electricity for the heck of it.  The electricity outside the state is being purchased because it is less expensive than the alternatives and this is the only way not to further crush the finances of North Carolinians. 

It isn't like out-of-state renewable electricity is a bargain.  The out-of-state purchases already are very expensive!  "On its contracts with renewable generators here [Texas], Progress pays about 6 cents a kilowatt hour for the electricity, and a premium ranging from 6 cents to 18 cents for the green credit, depending on the project."

3) If I own a business and make a really bad widget that is far costlier than my competition, I should go out of business.  But what if I get the government to mandate that people buy my lousy product--that would be a great business model.

That's exactly what is happening with renewable energy.  The state legislature is mandating that citizens pay a lot more for electricity (including the poor) so that some rent-seekers can make a profit.

This mandate, which already is the biggest subsidy of them all, doesn't even include the massive federal subsidies that renewable resources like wind and solar already receive.

This apparently still isn't good enough to help the renewable energy industry.


From the article: "If we're burning coal in our power plants and buying wind credits in the prairie states, that doesn't give us any environmental advantage," said Rosalie Day, policy director at the N.C. Sustainable Energy Association in Raleigh. "The purpose is to create jobs and environmental benefits in our state."

I could write a book about this quote, but let me say that on Monday, the John Locke Foundation will be releasing a report that will make it very clear that it is absurd to suggest that SB 3 would create jobs.

Stay tuned for this critical report.

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AFPNC makes special delivery

Posted by Mitch Kokai at 5:18 PM

Americans For Prosperity North Carolina delivered thousands of petitions to the State Capitol today. Those petitions urge Gov. Beverly Perdue to veto any budget plan that includes tax increases.

Click play below for more, including a short interview with AFPNC state director Dallas Woodhouse.

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A Burr in their saddle

Posted by David N. Bass at 3:21 PM

My question is simple: Why can't Democrats find a challenger to face Richard Burr next year?

It's early days, yes, but more candidates should have thrown their hats into the ring by now, especially considering Burr's weak position.

Consider recent history: Last year North Carolina broke for a Democratic presidential candidate for the first time in three decades. Burr's Republican comrade in the Senate, Elizabeth Dole, lost handily to a liberal legislator the same year, and Democrats solidified their majority in the congressional delegation by unseating five-term Republican Robin Hayes.

To make matters worse for Burr, his approval numbers are in the can, he’s been the target of effective attack ads excoriating his panache for panicky ATM withdrawals, and polls show that many North Carolinians don’t know who he is, despite his presence in the Senate for almost six years.

Given these facts, you'd think the field would be stocked with Democratic candidates. Not so.

For months now, the party faithful have sought a suitable challenger to face the weakened Burr, with disappointing results. Attorney General Roy Cooper? No thanks. Congressman Heath Shuler? Maybe some other time. Congressman Mike McIntyre? Don’t think so.

Several other Democrats haven’t ruled out a bid to unseat Burr, but none have excited or galvanized the base, even a little. Secretary of State Elaine Marshall appears willing to take on the challenge, and might become the lead contender if no other candidates crop up. Her record on statewide elections for federal office is less than stellar, though.

Political prognosticators have to wonder — given Burr’s vulnerability, and North Carolina’s plethora of elected officials who are Democrats — is this the best the party can do?

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Friedman Legacy for Freedom Day

Posted by Mitch Kokai at 2:49 PM

Though he died in 2006, economist Milton Friedman's ideas still influence public policy debates today.

The John Locke Foundation joined the Friedman Foundation for Educational Choice today — what would have been Friedman's 97th birthday — in celebrating the Friedman Legacy for Freedom Day.

Economics professor Jennis Biser of North Carolina A&T explains below a key element of Friedman's philosophy.

Watch the full 50:45 recording by clicking the play button below.

You'll find other John Locke Foundation video presentations here.

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North Carolina and the Connecticut Compromise

Posted by Mitch Kokai at 2:32 PM

Many of us admire the U.S. Constitution today, but few have spent much time thinking about the process that helped put that Constitution in place.

Having read David O. Stewart's account of the 1787 Constitutional Convention a couple of years ago, your correspondent looked forward to Richard Beeman's lengthier exploration of the same subject in Plain, Honest Men: The Making of the American Constitution.

Readers will no doubt finish the book with greater appreciation of the fact that the design, approval, and implementation of the U.S. Constitution faced a number of challenges — many of which could have derailed the entire process.

North Carolina readers might enjoy the following passage discussing this state's role in ensuring support for the "Connecticut Compromise," which determined representation in the two chambers of the new Congress. An impasse between large states, which preferred proportional representation, and small states, which wanted equal representation, threatened to end the entire constitutional debate. A compromise set up the system we have today: a House with proportional representation and a Senate giving each state two votes.

[T]he five positive votes came from four small states — Connecticut, New Jersey, Delaware, and Maryland — joined by North Carolina. Pennsylvania, Virginia, South Carolina, and Georgia rejected the compromise. Masachusetts was divided. ...

The one significant shift from the previous votes on the issue was that of North Carolina. Some part of the explanation may lie in the fact that William Blount, who had sided with Madison and other large-state delegates previously, was abset, having traveled to New York to serve in the Continental Congress. It is also likely that Hugh Williamson, certainly the most distinguished member of the North Carolina delegation, had come around to see that compromise on the issue of representation in the Senate was essential to the success of the Convention. Earlier that month, on July 2, speaking in support of creating a committee to arrive at a compromise on the matter, Williamson had warned that "if we do not concede on both sides, our business must soon be at an end." Writing to North Carolina governor Richard Caswell after the fact, he commented on "how difficult a part has fallen to the share of our state in the course of this business," going on to conclude that his state's actions on the critical business of the Convention may well "have contributed to the happiness of millions." Whether through Williamson's powers of persuasion or through a common recognition that compromise was essential, three of North Carolina's delegates — Williamson, William Davie, and Alexander Martin — voted in favor of the compromise, with only Richard Dobbs Spaight opposing it. 

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Vote for Sotomayor, or else

Posted by David N. Bass at 12:49 AM

Democratic Party leaders in Washington are telling Republican senators to vote for Sonya Sotomayor -- or else. The Associated Press reports:

The Senate debate over Supreme Court nominee Sonia Sotomayor turned bitter Wednesday, after Democrats warned the GOP it would pay a steep price for opposing the judge who would be the first Hispanic justice, and a top Republican charged they were playing destructive racial politics.

Majority Leader Harry Reid implored Republicans Wednesday to join Democrats in voting to confirm Sotomayor next week, warning that GOP opposition would bring the same sort of public backlash that followed the party's spirited opposition to measures that would have given some illegal immigrants a chance to gain legal status.

"I just think that their voting against this good woman is going to treat them about the same way that they got treated as a result of their votes on immigration," said Reid, D-Nev.

My, what a short memory span. As we have discussed previously on this form, does anyone remember names like Estrada and Gonzales? Both Hispanic appointees (in the latter case, an attorney general) in the Bush administration.

Liberal opposition to these and others was never construed as racism, nor were dire political results predicted for voting against them. The only difference between this situation and the current one is a partisan difference, showing once again the Left's hypocrisy on race.

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What is the allure of healthcare collectivism?

Posted by George Leef at 11:40 AM

Sheldon Richman doesn't see why we should be looking to the government in this piece.

On the contrary, he argues that we would be much better off if we escaped from the heavy government regulation that already exists.

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Krugman will say anything to promote socialism

Posted by George Leef at 11:26 AM

And the ever-alert Don Boudreaux nails him on it. Read Don's letter to the New York Times in response to the latest Krugman propaganda piece:

Editor, The New York Times
620 Eighth Avenue
New York, NY 10018

To the Editor:

Paul Krugman alleges that "private markets for health insurance, left to their
own devices, work very badly" ("Health Care Realities," July 31). Apart from
anecdotes about patients with acne and broken hearts being denied coverage, his
only evidence for his claim is that "only around 70 cents of each premium dollar
actually goes to care."

So what if unsubsidized private insurers spend 30 cents on the dollar to supply
coverage if that coverage is good? I offer here real-world evidence from family
friends that unsubsidized coverage is not only readily available but also is
better than the government-subsidized and regulated coverage.

My friends, a couple in their mid- and late 40s, own a small business and have
two young children. They purchase unsubsidized private health insurance –
directly from the insurer – for a monthly premium of $212. Their policy has an
annual deductible of $10,000. This means that their MAXIMUM annual
out-of-pocket medical expenses are $12,544.

Sounds like a lot? My family and I (about the same age as my friends, but with
only one young child) get our health insurance through my employer (so it's
tax-deductible and subject to more government regulations of the sort that Mr.
Krugman asserts are necessary to make private insurance work). For coverage
with a $25 deductible per medical event, we pay out-of-pocket a monthly premium
of $144, while my employer kicks in monthly $974. So the MINIMUM amount spent
annually to supply my family with health coverage is $13,416 – nearly $1,000
more than the purely private coverage that allegedly "works very badly" compared
to the government subsidized and regulated variety.

Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

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Cash for Clunkers

Posted by Dr. Michael Sanera at 10:40 AM

The "Cash for Clunkers" fiasco is keeping the web and the media busy.  Here is the analysis from The Heritage Foundation.

This conclusion says it all:

When President Obama bailed out General Motors he told the nation his administration: “will not interfere with or exert control over day-to-day company operations.” But despite what he may believe, his cash for clunkers program does exactly that: it significantly interferes with the day-to-day operations of millions of companies nation wide. In that same Business Week interview mentioned above, Obama says: “What you haven’t seen from our Administration is a suggestion of a bunch of command-and-control, top-down, heavy-handed bureaucratic regulations that would bog businesses down.” But that is exactly what the cash-for-clunkers is.The fact that Obama doesn’t understand this basic economic fact should truly frighten all Americans as he plots more non-"command-and-control, top-down, heavy-handed bureaucratic regulations" for the health care, energy, and financial sectors. As one auto dealer told CBS News: “If they can’t administer a program like this, I’d be a little concerned about my health insurance.”


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A tangible casualty of the GA's tax deal

Posted by Rick Henderson at 10:06 AM

For those of you who still believe tax rates have no impact on business behavior, and that entrepreneurs will just mutter under their breaths and pay whatever the government demands, may we suggest this nugget from today's Under the Dome. It's a report on one one taxpayer who won't be participating in the General Assembly's looting of North Carolinians: Christopher Kaminski, owner of the Web portal.

From Dome: 

Large online retailers like and pay commissions to web sites that steer customers to products on Amazon or Overstock. The budget agreement lawmakers reached Thursday would require the big .com retailers to collect sales tax on those purchases, treating them like brick-and-mortar stores in the state.

State law already requires North Carolinians to pay sales tax on internet purchases, but taxpayers have to report themselves, and few do.

Amazon and Overstock have cancelled their commission programs in North Carolina, and web site operators in the state, like Kaminski, are calling the plan a job killer. 

Kaminski, who runs, was one of dozens of web site operators who recently wrote legislators to oppose the tax. He said his web site is his full time job and the loss of commissions will force him to move, depriving North Carolina of the taxes he pays on his income, his property, his fuel and his boat.

"Instead of making money," Kaminski wrote, "North Carolina will see a decrease of over $30,000 in tax revenue from my family alone."

If you get Carolina Journal (you mean you don't?), you'd learn the inside story on this online tax in the August issue -- coming to mailboxes soon! To sign up, go here.

Linkable Entry

NYT: Special interests? Oh, they're good this year.

Posted by Jon Sanders at 09:49 AM

See previous: "AP: Special interests? Oh, they're good this year."

The New York Times reports on the rampant rent seeking:

Major global-warming legislation that squeaked past the finish line in the House last month attracted millions of dollars in new lobbying money.

The fresh cash came from a combination of new groups and existing companies ramping up their payments to hired advocates in the second quarter of 2009. Entities hiring climate lobbyists for the first time shelled out more than $1.5 million overall from April to June and included a new natural-gas coalition and an arm of former Vice President Al Gore's nonprofit empire. ...

"This bill was all about lobbyists," said Tyson Slocum, director of the energy program at Public Citizen. "Lobbyists from big environmental groups hooked up with utilities." ...

On the rent-seeking point, Max Borders reminded me of Bjorn Lomborg's recent Wall Street Journal piece about "The Climate-Industrial Complex." In light of Lomborg's quotation referencing the famous warning by Pres. Eisenhower, I would also like to quote from that speech:

... the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. ... The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present and is gravely to be regarded.

Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientifictechnological elite.

In sum, watch out when researchers chasing federal grant money start playing the desired tunes while politicians and shills run about screeching how "Science has spoken!"

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A real budget opporotunity

Posted by Dr. Roy Cordato at 09:11 AM

While the Democrats in the General Assembly continue their little inter-party debate about how best to bilk taxpayers out of an additional billion dollars, they already seemed to have solved the budget problem. According to today's Winston Salem Journal, reporting on reauthorization to keep the government funded:

The so-called continuing resolution has no expiration date...If legislators can't conclude a deal on spending -- or if Perdue can't sign on to a deal -- the governor would have the constitutional duty to keep spending within the budget levels that the legislature set for the foreseeable future.

In other words, here's their chance to pack it up and go home for the session with no tax increase and a state government that is still up and running. And, to top it off, since the citizens would be much happier, they would probably be increasing their chances of getting reelected in 2010. But of course to leave town without a tax increase would miss the point, now wouldn't it?


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I give Fannie Flono's op-ed a 4 out of 10

Posted by Dr. Terry Stoops at 07:47 AM

Charlotte Observer columnist Fannie Flono makes a decent case giving kids "more time to learn the material, and provide them with more individual attention from highly effective teachers" before they enroll in classes that require an end-of-course test.

Unfortunately, for every reasonable argument, there are claims like this doozy:

For students, failing a single test in a single year could mean being retained or not being allowed to graduate.
Actually, the problem is just the opposite. Kids can fail several tests (and classes) and still be passed along to the next grade.

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N&O + NCAE = true love

Posted by Dr. Terry Stoops at 07:29 AM

Only the News & Observer would cover a lobbyist-sponsored advocacy effort in such a syrupy way.

Teachers who traveled to Raleigh this week to talk to legislators felt more like the discards than the lifeblood. The N.C. Association of Educators organizes Wednesday trips for its members to see lawmakers. Teachers are usually asked to wear red, but this week some wore pink to symbolize pink slips.
Journalistic fairness and objectivity is the actual discard here.

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This weekend on Carolina Journal Radio

Posted by Mitch Kokai at 06:47 AM

With more information available online every day, it makes sense for government agencies to use the Internet to help people keep track of government business. That’s one reason why the John Locke Foundation created Joe Coletti will discuss the new Web site during the next edition of Carolina Journal Radio.

Speaking of transparency, you’ll get a taste of the debate over legislation designed to make it easier for media outlets and government watchdogs to pursue lawsuits against government agencies that refuse to turn over public records.

In other court-related news, John Hood will join us to discuss some of the latest developments involving former North Carolina political leaders who’ve spent time behind bars. You’ll also hear reaction from State Superintendent of Public Instruction June Atkinson and her attorney, Bob Orr, as a judge has sided with them in a legal fight over operations within the state’s public school establishment.

The program also features comments from some lawmakers pushing for changes in North Carolina’s 50-year-old annexation law.

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Today's Carolina Journal Online features

Posted by Mitch Kokai at 06:43 AM

This week's Carolina Journal Online Friday interview features a conversation with IndUShealth CEO Rajesh Rao about "medical tourism."

Michael Sanera's guest Daily Journal explores the green-at-all-costs mentality that has changed This Old House.

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