Ethanol’s Lessons for New Mexico by Peter Burrows 5/10/18  elburropete@gmail.com – silvercityburro.com              

Last March, New Mexico’s Senator Tom Udall introduced a bill that would revise the Renewable Fuel Standards to virtually eliminate blending corn ethanol into gasoline.  It would drop the current 10 percent standard to 9.7 percent and begin a ten-year reduction of the required use of corn ethanol from 15 billion gallons in 2018 to 1 billion by 2029. The Sierra Club and the National Wildlife Federation strongly support the bill.    

This is very good news.  The evidence has been piling up for over 20 years that using corn as a biofuel source has been wasteful, unnecessary and counter-productive.  Here’s what Michael Bruce, Executive Director of the Sierra Club said about the proposed bill and its supporters:   

“The Sierra Club applauds Senator Udall, Congressman Welch, and all the members of Congress who are putting common sense first rather than continuing to permit a dirty and destructive policy to remain intact. Instead of continuing to play political games with our environment and public health, these legislators are moving policies that will help undo the damage caused by the ethanol mandate. We urge Congress to pass this legislation immediately rather than continuing to push false theories about ethanol.”  

As the saying goes, “Strong letter to follow.”  The above statement could have been made 10 years ago, but hey! Better late than never.     

One of the “false theories about ethanol” was that its use would reduce CO2 emissions. Study after study has shown just the opposite: producing and using corn ethanol actually increases CO2 emissions.  Furthermore, using corn has increased the world-wide cost of food by billions of dollars while increasing, not decreasing, the cost per gallon of gasoline.   

The conclusion that ethanol increases CO2 emissions is what has earned the environmentalists’ wrath. In the Church of Global Warming, to increase CO2 emissions is to sin. The fact that it is also very costly is of no concern. After all, they have a world to save.   

To that point, Udall’s bill maintains a cellulosic biofuel mandate.  Cellulosic biofuel uses waste organic plant material, from corn stalks to grass clippings. In theory, it’s a good idea, but the reality is that It is ridiculously expensive.  The Energy Independence and Security Act (EISA) of 2007 mandated a goal of 9 billion gallons of cellulosic ethanol by 2017. The actual production: 540,000 gallons.   

This lack of cellulosic ethanol didn’t deter the EPA from attempting to punish refiners of gasoline for not using the mandated cellulosic feed stocks that did not exist!!  Fortunately, that EPA effort was struck down by a federal court.     

To Udall’s credit, his bill eliminates the ridiculous cellulosic ethanol mandated by EISA, which rises to 21 billion gallons in 2022, and replaces that with a cap of “only” two billion gallons, which doesn’t have to be reached until 2037, at which time the mandate ceases to exist.  I think this is essentially a small concession to the ethanol “true believers” to get their support for the overall bill.   

Regardless, Udall’s bill is a big first step toward curbing an industry, ethanol, that would not exist in anything near its present size without government mandates and subsidies.  Will Udall’s bill get through Congress? It will face opposition from the owners of the over 200 distilleries that have been built to produce ethanol, and opposition from thousands of corn farmers.    

Even if Congress can overcome the millions that will be spent to stop Udall’s bill, President Trump, wearing his RINO hat, has said he will “protect” the corn farmers. “Corn farmers” of course means Iowa, and Iowa means “first primaries,” which in turn means, “Kiss those corn farmers’ tractors, cows and asses.” A wag once noted that if Florida had the first primaries, we’d be making ethanol out of orange juice.     

You’re probably thinking, “OK, Burro, what’s all this got to do with New Mexico.”  Here’s the answer: Every politician in New Mexico, regardless of party, top-to-bottom, thinks that New Mexico has a great future with renewable energy.  All the winners and losers in the upcoming primaries, all the winners and losers next November, all of them, will tout solar panels and windmills as great businesses for New Mexico’s future. If you know of one who doesn’t think that, please tell me who.  Please.  

You’re thinking, “Well, what’s wrong with that?”  What’s wrong is that, like the ethanol industry, windmills and solar panels are almost wholly dependent on government mandates and subsidies.  I would guess that solar is about 90% dependent on government, and wind 100%.    

The second or third largest owner of windmill farms in America is Berkshire Hathaway. The chairman of Berkshire Hathaway is life-long liberal and mega-billionaire Warren Buffett, who is famous for his blunt-spoken opinions. Without tax credits, he said, wind-generated electricity “doesn’t make sense.”    

Without those tax credits, New Mexico has no wind farms and no future as a big producer/exporter of windmill electricity.   

At this point, some of you are saying, “But Burro, New Mexico is so sunny! We should encourage people to put solar panels on their roofs, in fields, on buildings, along the road sides, everywhere! And then we could export all that solar electricity which would save the world from global warming and we’d get rich in the process!”  

The problem with that fantasy is the hard reality of costs.  Even if solar electricity was free, which it isn’t, the cost of storing solar electricity so it can light your house at night is very expensive.  Tesla, the electric car company, is a leader in battery technology and recently completed a project Tesla’s owner, Elon Musk, called the “world’s largest battery.”   

It is a $50 million electric storage facility in Australia that will power 30,000 homes for —-Drum roll please ––one hour.  There are about 7,500 homes in Grant County, so Musk’s “battery” would provide us four hours of electricity.   If we only occasionally had a cloudy day and never had two cloudy days in a row, we would need 36 hours of storage. (No sun from 6 PM through 6 PM the next day is 24 hours, and until 6 AM the next morning is an additional 12 hours.)  

That means we would need nine of Tesla’s batteries at a cost of $450 million.  Financed at 5% and depreciated over 20 years, or 5% per year, means this “battery” will cost Grant County $45 million per year. The cost per 7,500 households would be $6,000 per year, or $500 per month.  

How does $500 per month compare to your current electricity bill?  This is with only 36 hours of storage when at least triple that would be needed. This is with zero cost electricity, i.e. free solar panels that last forever, producing electricity with no transmission costs on free land that is not taxed.    

Last year, a couple of New Mexico’s legislators proposed that 80 percent of NM’s electricity be from renewables by 2040, a huge increase from the 20 percent mandated by 2020.  Some environmentalists want to be 100 percent by 2035. Either option would require massive amounts of storage and a massive increase in your electricity bill.      

Someday, I don’t know when, even in New Mexico it will be recognized that renewable energy is ridiculously expensive. When that day comes, and it will, wind and solar will face a “Udall bill” that will end mandates and subsidies.  Does New Mexico really want to invest its future in industries that depend on subsidies and mandates that will someday end?        

What is “Net Metering” and why should you care? By Peter Burrows 5/4/18  elburropete@gmail.com – silvercityburro.com 

 To encourage homeowners to install solar panels, most public utilities, including Public Service of New Mexico (PNM), are required by law to pay homeowners for any excess electricity the solar panels produce.  This doesn’t happen all the time, but when it does, the excess electricity is fed into the utility’s grid for sale to other customers. 

Imagine that homes with solar panels have two meters, one that measures the electricity coming into the home from the electric utility, and another that measures the excess solar electricity that goes into the utility grid on those occasions when the solar panels produce more electricity than is being used.  The net of the two is the “net metering” that determines the electric bill.  

In reality, when excess electricity is fed into the utility’s grid, the homeowner’s meter runs in reverse, lowering the electric bill in real time. 

A very important feature of net-metering is that the utility is required to pay the homeowner the same price it charges the homeowner, i.e. the retail price.  At first glance, this sounds fair.  If you’re paying the utility $.11 per kwh for the electricity they sell you, the utility should pay you $.11 per kwh for the electricity you sell them.  

There are two problems with that thinking. The first is that when the utility buys a kwh from you for $.11 and then resells that kwh at for $.11, the utility loses money.  Even a co-op run by pathological profit haters will realize that there must be a markup over the cost of something to cover heat, lights, taxes, accounting and so on.  

You may say, “Oh no, the utility doesn’t need to charge for all that because it’s only giving me back my own electricity when I need it.”  In essence, the utility has stored your excess electricity so you can use it at a later time. Conceptually, that is perfectly accurate.  In practice, that is hugely inaccurate. 

This is the second problem with net metering: It allows the homeowner to use the electric grid as though it was a huge COST-FREE storage battery when there is no such thing as cost-free electric storage, battery or otherwise.   

To illustrate the point, if you disconnect your home from the utility’s power, go “off the grid,” any excess electricity generated by your solar system will be wasted unless you can store it.  The most economical way to do that today is to buy a Powerwall battery from Tesla Motors. Tesla’s 7-kilowatt/13.5-kilowatt-hour storage system costs $5,900, plus “supporting hardware,” whatever that is, and installation.   

You’ll probably need several of these, depending on the size of your solar array, how much sunshine you get, and how much electricity you need.  Regardless, it’s hardly free.  

Bottom line: Net metering is a subsidy to homeowners who have solar installations. If you think this subsidy is paid by the electric utility, you are sadly mistaken.  Look at your electric bill. You will note that there is a “Renewable Energy Rider” which is an addition to your bill, not a reduction. On my bills, this adds about five percent to my electricity cost, before taxes.  

This is how WE, not Public Service of New Mexico (PNM) help to pay the monthly electric bills of people wealthy enough to install solar panels. This is in addition to the subsidy we paid, indirectly, through tax credits given to people as an incentive to buy the solar systems. Tax credits are a reduction in income taxes owed, which means somebody else must pay higher income taxes.   

A case can be made that such subsidies are necessary in order to get a new industry up and running.  I don’t agree but, regardless, it would be a great victory for transparency if candidates for public office would say: “I am in favor of raising your taxes so that rich people can install solar systems and have lower electric bills in order to save all of us from global warming.”   

Or something like that.  

Until recently, 41 states required net metering at retail prices. In Michigan, the Public Service Commission, the equivalent of our Public Regulatory Commission, just last month replaced retail pricing with something closer to wholesale pricing, a step in the right direction.  Montana is considering a similar change. 

In New Mexico the chances of anything so sensible are remote.  Politicians of both parties are enamored of renewable energy, and the Public Regulatory Commission (PRC) will do what is necessary to help PNM meet the renewable fuel standards mandated by New Mexico’s legislators, something the PRC should do, even if that means raising our electric bills. 

Considering its importance, one would hope that candidates running for election to the PRC would be familiar with net metering.  There are five candidates running to represent our district, District Five, two are Democrats, three are Republicans. 

I have met two of the Republicans and neither was familiar with net metering.  One, Ben Hall, was on the PRC from 2010 to 2014 when he was defeated for reelection, and I think he should have been knowledgeable about net metering. Instead, he tried to tell me that it was some kind of Federal mandate.  Ben Hall should withdraw from the race.  

The other candidate I have met, Chris Mathys, also didn’t know about net metering but at least he didn’t try to BS me. There’s hope for him.  I have not met the third Republican candidate, Joe Bizzell, but I did email him yesterday, “Is net metering a good idea?”  

No answer yet. I plan on asking the two Democratic candidates the same question, and I’ll let you know how all three respond.