Introduction

On March 21, 2025, Kenny Stein, Vice President of Policy at the Institute for Energy Research (IER), presented his insights during a hearing by Pennsylvania’s House Republican Policy Committee. The session, titled “Stopping New Energy Taxes,” aimed to discuss the detrimental effects of energy taxation on both consumers and businesses within the state, as well as the broader implications for investment levels.

Understanding Energy Taxes

Stein emphasized that energy taxes affect more than just the producers of energy; these costs permeate down the supply chain, ultimately burdening consumers. For instance, rising energy prices manifest as higher costs at gas stations and increased heating bills. Energy serves as a crucial input across various sectors, which means that any tax levied on energy ripples through the economy.

The Broader Economic Impact

Every step in the product lifecycle, from agriculture to manufacturing to retail, is impacted by energy costs. This compounded toll from energy taxation can lead to significantly inflated prices for everyday goods.

The Regional Greenhouse Gas Initiative (RGGI)

Stein specifically highlighted the Regional Greenhouse Gas Initiative (RGGI) as a pertinent example of an energy tax. He pointed out that while RGGI may be classified legally as a fee, its economic effects are akin to a tax on energy production. An analysis of RGGI implementation revealed that electricity costs in RGGI-affiliated states increased 64% more than in states without such regulations, a pattern expected when taxes are added to energy generation.

The Misconception of Renewable Energy Costs

While wind and solar energy may appear cost-effective upon generation due to the absence of ongoing fuel expenses, the overall grid costs must be considered. These include initial capital investments for infrastructure, the need for backup energy sources, and the maintenance of grid stability. Historical data shows that states with high renewable energy percentages also tend to have elevated retail electricity prices.

Policies Impacting Pennsylvania

Governor Shapiro’s energy strategy, which combines taxing conventional energy sources while mandating substantial renewable energy contributions, represents a dual approach to imposing costs on consumers. Stein articulated that this model could result in higher electricity bills without benefiting state revenue since these funds would primarily support the renewable sector.

Interstate and Federal Dynamics

Beyond state-level concerns, Stein noted that policies from neighboring states and federal initiatives complicate the landscape. Governor Shapiro’s recent lawsuit against the PJM Interconnection, centered on capacity auction costs, highlights the conflict arising from state-mandated energy policies. He criticized the lack of accountability on those who advocate for renewable energy subsidies while overlooking the implications for grid reliability.

Conclusion

In Stein’s view, imposing new taxes on reliable energy sources during a time of economic uncertainty could exacerbate existing challenges for consumers and businesses. As policymakers navigate the complex energy landscape, striking a balance between environmental goals and economic viability remains a pressing concern for Pennsylvania.