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Jeremiah Goulka: Cove Point proposal a bad deal for Maryland

Did your bill for heating, cooking or electricity just double or even triple?

This winter was brutal on utility rates, driving “spot” natural gas prices up from under $5 per million British thermal units to over a whopping $120 on some days in December and January. Many Baltimore residents saw their heating costs jump 24 percent in January compared to last year, and Baltimore Gas & Electric had to create a payment program so that lower-income ratepayers could afford to keep their homes warm.

If you don’t like what you’ve seen so far, you really won’t like what Dominion Resources Inc., is trying to foist on Maryland.

The Richmond, Va.-based energy company wants to transform its Cove Point natural gas import terminal in Lusby into an export facility. Dominion needs a permit to build its own utility-scale electricity plant that would provide the vast amount of power required to cool natural gas down to 270 degrees below zero Fahrenheit to liquefy it for shipping. (No, Marylanders would get none of those 130 megawatts.)

If the Maryland Public Service Commission approves Dominion’s application, natural gas prices in the state would rise by about 6 percent in the short and long terms in one fell swoop. And that’s according to Dominion’s own consultants, so who knows how much higher the prices would really go?

Under state law, a key factor in their decision — which is due by May 30 — is the economics of the proposal: the costs and benefits to the state, its citizens and its businesses.

Dominion is deluging the public with full-page ads singing the praises of natural gas exports — it even pushes ads on Pandora Internet radio — but it consistently fails to point to any clear evidence of net economic benefits for Maryland. And in PSC hearings last month, when commissioners asked Dominion to provide some evidence, its representatives had little to offer.

Sure, Dominion talks about jobs, and there would be some. But how many? After a short-term influx of construction jobs, the project will only retain a paltry 26 permanent employees — many of whom will likely be from outside the state. Indirect and induced jobs will be a measly 104.

Sure, Dominion talks about tax revenue, but the company has wrangled itself a sweetheart deal with Calvert County that after five years slashes its real and personal taxes by 42 percent.

Of course, Dominion does not talk about how its facility would be a massive noise and air polluter, which is guaranteed to trash local property values, further reducing tax revenue (not to mention dumping new health care burdens onto state and local governments). Or how it will harm the Calvert County tourist economy or how the surge in shipping will harm the livelihoods of Marylanders who depend on Chesapeake Bay fisheries or how these will reduce tax revenue.

Of course, Dominion does not talk about the costs of repairing roads that would get far more use than they were designed to bear or about the huge costs of dealing with climate change. Measured by shale gas lifecycle, Cove Point would be the state’s top emitter of greenhouse gases, outpacing all the state’s coal plants combined.

Above all, Dominion does not talk about how the entire purpose of the Cove Point facility, which is a beachhead in the natural gas industry’s push to lift federal limits on gas exports, is to raise gas prices. The frackers flooded the domestic market with shale gas, and since gas prices are about four times higher in Asia these days, they’ve pinned their hopes on exports creating a sellers’ market.

A pro-export study commissioned by the U.S. Department of Energy predicts that increasing exports nationally would drive up domestic prices by as much as 27 percent and that every sector of the economy other than gas would either take a hit or see no benefits. An anti-export study funded by Dow Chemical — many domestic manufacturers oppose increasing exports — forecasts that high exports would lead to prices tripling.

Who’s right? In real life, when Australia lifted its own export ceilings, prices tripled, and at least one of its manufacturers decamped to the United States for cheap gas.

If the commission grants the permit, there will be a few winners. But mostly there will be losers, and unlike most of the winners, they will be Marylanders.

As one of the state’s experts told the PSC last month, the question is whether the winners will compensate the losers. “Generally, they don’t.”

Jeremiah Goulka is a writer and public policy analyst based in Washington. His website is www.jeremiahgoulka.com.

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