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The Case Against Energy Subsidies in Florida

State Rep. Scott Plankton

State Representative Scott Plankton and Agricultural Commissioner Adam Putnam have been pushing for government subsidies to grow Florida’s economy. According to James M. Taylor, J.D., from Florida Political Press, reports, “Digital Domain Media Group Inc. closed its taxpayer-subsidized film studio Tuesday and filed for bankruptcy protection, just a few short months after State Rep. Scott Plakon (R-Longwood) told skeptical Tea Party leaders that the Florida film industry provides a sterling example of why government officials should hand over taxpayer dollars to politically connected renewable energy companies.”

According to Taylor, “Between 2009 and 2012, Florida’s Republican-dominated legislature and various local governments handed over $135 million in taxpayer subsidies to Digital Domain. Those subsidies included prime real estate and a lavish headquarters building in addition to direct cash payments.

“$135 Million Wasted,” notes Taylor.

“In an April conversation with Tea Party leaders unhappy about legislation giving renewable energy companies $100 million in taxpayer subsidies, Plakon said state subsidies for film companies such as Digital Domain demonstrate why it is good for government to generously subsidize politically connected companies and industries,” writes Taylor.

Another effort to use government money to subsidize energy in Florida is the Energy Economic Zone (EEZ). There are two EEZ pilot projects currently underway, one in Sarasota County and another in the City of Miami, Florida.

Why an Energy Economic Zone, why now and for what purpose?

Dennis Cauchon, writer for USA Today, in his column “Household electricity bills skyrocket” points out, “Electricity is consuming a greater share of Americans’ after-tax income than at any time since 1996 — about $1.50 of every $100 in income at a time when income growth has stagnated, a USA TODAY analysis of Bureau of Economic Analysis data found. Greater electricity use at home and higher prices per kilowatt hour are both driving the higher costs, in roughly equal measure. . .”

It makes sense for households, businesses and government to find ways to save on their electric bills. But is the creation of a government subsidized EEZ the way to do that?

One of the driving forces behind the creation of an EEZ in Sarasota County is the building of a methane power plant at the county landfill. According to Gary Bennett from Sarasota County, “County staff will be recommending that a private developer be allowed to design/build/operate a landfill gas to energy facility at the Central County Landfill in Nokomis. Staff believes the project is feasible. The estimated cost would be roughly $5-6 million dollars for a 3.2 megawatt facility based on cost estimates we have seen. Permitting is extensive. Includes both state and local. [The] Developer would pay the cost. Power would be fed to the power grid so no back up needed. This project once approved takes roughly 18 months to permit and complete.”

County staff was asked if a feasibility study was conducted.

According to Gary Bennett, “We did look at costs if the County would build a facility but it was looked at in a very simplistic manner. It was not feasible for the County when the price of renewable energy that would be paid the County dropped from about 7 cents a kilowatt hour to around 5 cents a kilowatt hour. Since this would be a developer driven project with all the financial risk on the developer, they will determine whether the project is feasible. The County would be looking for the developer to pay the County revenue for the landfill gas supplied to their facility.” Floridians currently pay 11.44 cents per kilowatt hour.

The two developers involved in the pilot EEZ are Hugh Culverhouse and Henry Rodriguez.

There is a key problem. EPA studies show a landfill must have trash rates over 1 million cubic feet/year minimum to produce enough methane for a plant. Sarasota County falls well below this level of trash rate per year. What will determine whether a generation unit can be successful are the percent of methane (usually 35-50 %) and the cubic feet per minute for each well. As the methane is collected it is sent thru scrubbers to clean and purify the gas prior to burning it to produce steam for a turbine or used in modified vehicles like buses or trash trucks as fuel. If not enough is available at a high enough concentration or pressure it is unlikely that Sarasota County landfill is a good candidate. Additionally, being a public/private utility it could be tax exempt and thus its inclusion in the EEZ is not needed.

The EEZ pilot projects are the first step in a process to create energy subsidies in all 67 of Florida’s counties and many cities for an questionable return on the taxpayers investment. After all saving energy is in everyone’s best interest. Do Floridians really need government stepping in to help?

Will the EEZ become Florida’s version of Solyndra?