How to Cripple Utah's Economy
For decades, Utah has worked hard to bring in better paying jobs. St. George provides a good example of this work – and a good example of how to bring economic progress to a halt.
Realistically, the economies of states largely follow the national economy. However, there are a few things state governments can do to boost or undermine their own fate. One specific thing Utah could do to hurt its economy would be to increase energy prices.
In south St. George, some enterprising individuals teamed with the City of St. George, the State Trust Lands Administration, and the Dixie-Escalante Rural Electric Association, to create the Fort Pierce Industrial Park. Without manufacturing, touristy places like St. George can develop very unhealthy economies. Through Fort Pierce, largely because of fantastic energy rates, St. George has placed itself on the map for clean manufacturing. The jobs that are being imported and created in the industrial park are fantastic, and, through the multiplier effect, those jobs are inuring to the broader benefit of the community and the State.
And, by the way, the affordable power for Fort Pierce is generated in the Uintah Basin, at the coal-fired Bonanza Power plant. Utah is a coal state.
One of the employers in Fort Pierce is Blue Bunny ice cream. Because of the affordable power rates, Wells Dairy decided it would make sense to produce lots of ice cream in St. George. Raise its power rates, and Blue Bunny loses its reason for being here -- as do other manufacturing businesses and prospective businesses sensitive to the costs of inputs (meaning, all manufacturing businesses).
Utah has some unique aspects that can help attract or repel business development. One of the best things Utah has going for it is affordable power. The Legislature knows this and is extremely concerned that Utah might lose this advantage.
By contrast, no matter what it does, California is looking at much higher energy costs in the future. Because businesses are extremely sensitive to higher energy costs, what can California do to keep from losing businesses to neighboring states in the future? Get them to take steps that will lead to higher energy rates. Let’s not take that bait.
Realistically, the economies of states largely follow the national economy. However, there are a few things state governments can do to boost or undermine their own fate. One specific thing Utah could do to hurt its economy would be to increase energy prices.
In south St. George, some enterprising individuals teamed with the City of St. George, the State Trust Lands Administration, and the Dixie-Escalante Rural Electric Association, to create the Fort Pierce Industrial Park. Without manufacturing, touristy places like St. George can develop very unhealthy economies. Through Fort Pierce, largely because of fantastic energy rates, St. George has placed itself on the map for clean manufacturing. The jobs that are being imported and created in the industrial park are fantastic, and, through the multiplier effect, those jobs are inuring to the broader benefit of the community and the State.
And, by the way, the affordable power for Fort Pierce is generated in the Uintah Basin, at the coal-fired Bonanza Power plant. Utah is a coal state.
One of the employers in Fort Pierce is Blue Bunny ice cream. Because of the affordable power rates, Wells Dairy decided it would make sense to produce lots of ice cream in St. George. Raise its power rates, and Blue Bunny loses its reason for being here -- as do other manufacturing businesses and prospective businesses sensitive to the costs of inputs (meaning, all manufacturing businesses).
Utah has some unique aspects that can help attract or repel business development. One of the best things Utah has going for it is affordable power. The Legislature knows this and is extremely concerned that Utah might lose this advantage.
By contrast, no matter what it does, California is looking at much higher energy costs in the future. Because businesses are extremely sensitive to higher energy costs, what can California do to keep from losing businesses to neighboring states in the future? Get them to take steps that will lead to higher energy rates. Let’s not take that bait.
posted by steve u. at 12/06/2007
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9 Comments:
Energy rates will go up, whether you like it or not. California has simply decided to either stop externalizing the environmental costs Utah does, or they are willing to pay more for energy that does not produce as many external costs. Internalizing our energy costs and following the leadership of states like California and New Mexico (who have growing economies with greater energy independence) will raise energy prices, and eliminate Utah's reputation as "a coal state," but it will also make Utahns healthier, open opportunities for renewable energy economies in more areas, and not discourage other economic growth.
I agree.
Sticking our heads in the sand and pretending our energy costs won't rise is naive and foolish.
There are many reasons business (and people) choose to come to Utah. Rather than doomsday preaching a mass exodus from rising energy costs, our legislators should be finding ways to augment other resources the state has to offer.
That would of course require foresight, which is not their forte.
Jason the:
Do you mean ways to augment other resources like the sales and use tax exemptions for purchases of equipment surrounding renewable energy resource enacted by the Legislature. Or maybe income tax credits for both residential renewable energy systems and large and small commercial renewable energy systems like the ones expanded by the Legislature last year (the Governor didn't propose as many or as broad of credits as the Legislature enacted).
Just wondering.
Coal-fired energy rates will not go up more than inflation in Utah -- unless we do something to make that happen.
Facts can be bothersome, but, to have vision, we need to understand where we presently are. I accurately described the situation in Fort Pierce. If, of course, someone has additional facts regarding the Fort Pierce situation and wants to speak to that, please enlighten the conversation.
Steve - What's your view of the coal-fired power plant proposed near Mesquite?
I'm opposed to the Mesquite plant. Dixie-Escalante Rural Electric Association is building a a major transportation line from St. George to Beaver Dam, AZ (just north of Mesquite). It makes far more sense to add capacity to Bonanza (in the Uintah Basin) or IPP (in Delta) and wheel it down.
In any event, though, I strongly doubt a coal plant will be built anytime soon by Mesquite or anywhere else in the U.S. Plants require huge capital investments and expectations of stability. In today's political climate, I just can't see any investor stepping up to fund a coal-fired plant.
http://www.airquality.utah.gov/Permits/PmtPowerPlants.htm
Utah issued 7 permits for CFPP in 07.
One is for a very large increase to IPP Delta.
Which is good and even better for the St George area as well. Seems the Toquop Energy Project already has permission to build the plant, they are asking to change the fuel source from gas to coal.
But you are correct that process has some time to pass to make happen or die.
Oh and it seems that St George was in the news recently about their desire to place generating stations along the proposed new pipeline from Lake Powell as well.
I'm ambivalent as to the pipeline, but if it goes in for sure generating stations should become a part of it, even if all they accomplish is fueling the pumps for the pipeline! At least such creates a mush lower cost delivery system.
Renewables are still a nice soft thought, they are an element, but only such. If 100% of all wind and solar stopped tonight, it would barely register a blip on the graph. We don't need 14MW plants, we need 2000 MW plants.
Oh and I do think that CA has got one hella lesson coming to it by declaring they will not purchase power sans wind/solar/hydro plants! CA residents will think the increases during the Enron supplied power was nickle and dime store increases. BTW I call a massive BS move on Governator, he made a declaration that in no way shape or form can be sustained. Sorta like the laws against the great salt lake must not rise above above a certain level. They did anyway!
Makes me almost totally sick to see Huntsman standing beside the governator saying the same things. I look at him very differently today.
Well that is about as close to a total post hijack as I will go.
Someone please help me understand exactly where St. Geo, Washington, Hurricane, Santa Clara, and Ivans get their electrical power right now. Are they involved in a cooperative and where is all of this power generated?
I'm curious what you might think about the article Carl Wimmer & Friends: Superheroes? that was recently published online in response to Paul Rolly's column.
Derrick Kay
Utah County, UT
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