New Report Disputes Job, Cost Forecasts Behind Proposed Legislation

HARRISBURG, Pa., May 3 /PRNewswire/ -- The Pennsylvania Coal Association (PCA) today said a new economic analysis absolutely refutes the jobs and cost assumptions being touted to defend higher alternative energy portfolio standards (AEPS) proposed originally in PA House Bill 80 and now in PA House Bill 2405.

"If it takes about 15,000 workers to generate and distribute the electric power in Pennsylvania(1), including power for export to other states, it defies logic that greater reliance on alternative energy sources could create 129,000 'job years' over a 15-year period of higher alternative standards, " said George Ellis, PCA President.  "That estimate appears inflated by some 93,000 job years."

"Before a 15 percent alternative energy standard is forced on Pennsylvanians, at a compliance cost estimated up to $1 billion per year, people have a right to facts about the consequences," Ellis said.  "Black and Veatch (B&V) estimates about costs and employment, widely-used to support proposed legislation calling for more stringent alternative energy mandates, now are shown to be simply unrealistic."

Energy Ventures Analysis, Inc. (EVA) of Arlington, VA, conducted a review of the B&V assumptions.   EVA is an energy and environmental forecaster, which provides analyses of projects and companies for buyers, sellers and banks, and EVA also provides expert testimony in regulatory proceedings.

The EVA analysis points to major flaws in B&V cost assumptions, including:

• B&V assumes a large carbon penalty or tax of $18 per ton in 2012, rising to $50 in 2026.  That artificially inflates conventional natural gas and coal energy costs in the B&V analysis by more than $6 billion, making renewable energy sources appear more competitive.   EVA points out that no one knows whether Congress will pass or will fail to enact cap and trade or similar energy/carbon legislation, with a $50 per ton penalty unlikely in any event.

B&V estimates are overstated by thousands of jobs and job years, EVA's analysis concludes:  

• B&V measures "cumulative jobs years" for job gains, but job years and job gains are two very different things, EVA notes.  The 129,000 "job years" actually translates into less than 7,600 sustainable jobs.    Even that number of jobs is overstated by B&V, as they assume low salaries and use too high of a multiplier.  EVA's independent calculation shows the real number of direct jobs created by an expanded alternative energy standard is only 2,084.  Given the price tag of more than $12 billion, that makes a very high "cost per job" from AEPS mandates.
• EVA notes that most alternative jobs created are in temporary construction positions, as opposed to operations, as little manpower is required to run wind and solar facilities.  While solar and wind manufacturing is labor-intensive, that labor may be done overseas and not in Pennsylvania, EVA points out.
• The worst overestimation of jobs is in wind construction, where B&V estimates are 27 times what EVA projects, while carbon capture and storage employment projected by B&V is more than 10 times what EVA estimates.
• Labor costs estimated by EVA are $90,000 per worker with a $68,000 salary, while B&V has estimated only a $55,000 cost per worker, not adding any benefits or other overhead, which inflates the number of jobs that might be created out of alternative energy expenditures.
• EVA reports there will be more significant offsetting job losses than projected by B&V, whose analysis did not take into account job losses associated with coal mining, transportation and byproduct disposal, although these obviously would be displaced with greater dependence on alternative sources.

Examples of other flaws that EVA's analysis reveals include:

• B&V assumes that solar costs will decline 5 percent per year, but such declines are not supported by projections by the Energy Information Agency.
• B&V overstates Pennsylvania's wind generation potential, which is measured by a capacity factor or CF.  In 2009, Pennsylvania had a CF of 18.6 percent compared to the 37.7 percent B&V projects for 2026.  Such CFs, EVA points out, are only in more wind-rich states like Iowa and North Dakota, which have CFs of 34.7 percent.

The complete EVA analysis memo is posted on the PCA Web site, www.pacoalassn.com.

About PCA

PCA is a trade organization representing bituminous coal operators – both underground and surface – as well as other associated companies whose businesses rely on a thriving coal economy.   PCA member companies produce more than 80 percent of the bituminous coal annually mined in Pennsylvania.

(1) Source:  Pennsylvania Economy League of Southwestern Pennsylvania

SOURCE Pennsylvania Coal Association