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Pennsylvania’s Energy Plan Released by Governor Corbett




by:
Margaret Anne Hill
Blank Rome LLP - Washington Office

Michael L. Krancer
Blank Rome LLP - Philadelphia Office

 
January 27, 2014

Previously published on January 2014

The title of Pennsylvania’s newly released Energy Plan says it all: "Energy=Jobs." Pennsylvania’s Energy Plan unabashedly embraces an "all of the above and below" energy policy as the key to making not only Pennsylvania more attractive and competitive, but also to making the United States more energy secure.

Pennsylvania’s Plan promotes the vision of energy source diversity and leverages that into economic growth opportunity, along with various other factors. Here is an excerpt from the Plan:

Simply put, energy equals jobs. For any business, energy costs are a critical operating expense. Pennsylvania’s abundant natural resources and competitive energy markets are an advantage in today’s global economy where every dollar matters. Significant growth markets are nearby as Pennsylvania lies within a day’s drive of 60% of North America’s population. To help capture these markets, Pennsylvania’s diverse and abundant resources offer nearly endless opportunity due to affordable and less volatile energy prices...[Pennsylvania] is a national leader in both energy production and resource diversity. This array of resources, paired with competitive energy markets, means affordable and abundant power delivered in a way that meets business needs.

The facts outlined in the Plan back those statements up. Besides being underlain by the Marcellus Shale, the 2nd largest energy field in the globe, here are some metrics on how Pennsylvania stacks up among all the states:

  • 4th in overall energy production at 3,858 trillion BTUs;
  • 2nd in net electricity generation;
  • 2nd in natural gas production (growing 1,144 % faster than No. 1 Texas);
  • 2nd in nuclear generation;
  • 4th in coal production and the only producer of high-heat anthracite coal;
  • 9th in installed solar generation capacity;
  • 15th in wind energy capacity and 9th in new wind capacity installed in 2012;
  • 19th in crude oil production (as well as hosting in Philadelphia the largest oil refining complex on the East Coast).

The Plan discusses in detail the contributions of all of the various combined energy sources that make up Pennsylvania’s energy portfolio, including: coal, oil and natural gas, nuclear, wind, solar, geothermal, hydro, biomass, biofuels, hydrogen fuel cells, and combined heat and power. Also discussed are energy consumption tools like energy efficiency, demand response, and energy storage. When you add competitive electricity markets to this combination, you have what Governor Corbett says are all the ingredients for making Pennsylvania the energy capital of the nation.

The Plan also recognizes that it takes more than fine and diverse energy sources to make for success; sound public policy has to overlay them and smart policy is the key that unlocks the potential. Pennsylvania’s Plan professes that free markets, private investment, and an entrepreneurial spirit are the essential keys to job production. This strategy has been working. In the oil and gas sector alone, there are currently over 240,000 workers in the core and ancillary industries; by 2020, shale gas development is projected to contribute nearly $14 billion in economic activity to Pennsylvania and generate nearly $5.6 billion in federal, state, and local taxes.

All of these ingredients, including a sound state government policy, get further leveraged by a host of other key factors important to businesses, including: low and stable energy prices; low cost and abundant feedstocks for manufacturing; location; transportation networks; a skilled, educated, and available workforce; educational institutions; and public-private partnership opportunities.

  • Energy Prices. As a result of the increased use and production of natural gas and competitive electricity markets, the price of power and natural gas to Pennsylvania citizens and businesses has decreased by about 40% since 2008.
  • Low Cost and Abundant Feedstocks. Businesses that use chemical feedstock from natural gas production as inputs for manufacturing other goods, such as agricultural products, plastics, pharmaceuticals, personal health care, cosmetics, and more, gain a huge competitive advantage by being close to their input supply.
  • Location. 60% of the North American population and six of the nation’s ten largest markets are within a day’s drive of Pennsylvania. That means access to hundreds of millions of consumers with low transportation and delivery costs.
  • Transportation Networks. Twenty-three interstate highways and the Pennsylvania Turnpike crisscross the state. There are also six international airports and major interstate and short rail networks. Philadelphia’s deepwater port ranks as the 4th largest in the United States, and Pittsburgh and Erie are important port centers, too. There are major pipelines traversing the state, as well. Additionally, in November 2013, Governor Corbett signed into law a major transportation funding measure calling for annual investments of $2.3 billion for the next five years.
  • Workforce. The Plan outlines the pro-active approach of the Pennsylvania Department of Labor and Industry, as well as the available tools being used to match current and prospective employers to job seekers.
  • Educational Infrastructure. The state is home to 260 degree-granting higher education institutions that are consistently listed among the top-ranked universities for business, biomedical research, material science, engineering, and computer science. In addition, the state’s K-12 system shows high graduation and performance rates.
  • Public-Private Partnerships. The state is bullish on strategic investments that encourage growth in the energy and manufacturing sectors. Available devices include grants, tax credits, tax abatements, loans, loan guarantees, and grants associated with job creation.

The Plan discusses liquefied natural gas ("LNG") exports, too. Preliminary figures from an ICF study being undertaken shows that even a modest amount of LNG exports from the United States of 8 billion cubic feet per day would boost U.S. employment by over 300,000 jobs and gross domestic product by up to $57 billion by 2035. In perhaps what is an understatement, the Plan notes that the combination of the state’s booming production and its ports make Pennsylvania "well situated to explore and capitalize on those opportunities."

The Pennsylvania Energy Plan outlines a bold vision of the future of American energy security, responsible development of our energy resources, and significant economic expansion. The Plan should be well-received, except in OPEC countries and natural gas exporting forum countries like Iran and Libya.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Margaret Anne Hill
Michael L. Krancer
Practice Area
 
Energy
 
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