OK folks - this is a consumer protection piece. God knows we love the idea of cleaner energy and energy independence. We just base our strategy in the reality of where we are as opposed to where we can be in a few years. And yes, we can be there in a few years, maybe 8 maybe 12, maybe 20, no one knows when exactly, but it will come. It's just not here now. As Don Rumsfeld said, "you don't go to war with the army you want, you go to war with the army you have." We can spur on the new technology, but until it pans out, we have what we have.

Green energy is President Obama's personal fetish. He has visions of solar panels and windmills dancing in his dreams. He talks about it at any chance he gets, and tosses money at it even more frequently. The stimulus has about 30% of its funds going to "enhancing renewable energy". We get it - he's excited about it. Still the science isn't there yet. Just the money being tossed at it.

The boondoggles range from wind farms, to solar companies to bullet trains and the Chevy Volt. T.Boone Pickens tossed a billion dollars into a windfarm in central Texas only to figure out there's no way to get the electricity back to where the people are. The electrical grid cannot transport it that far. He abandoned that project. He's switched to pushing natural gas, which coincidentally President Obama gave lip service to in the SOTU.

Warren Buffett turns out to be a huge recipient of a windfall of President Obama canceling the Keystone XL pipeline. Seems he owns Burlington - North Santa Fe LLC railroad, which transports all of the oil and natural gas coming out of Canada right now. Hey, has he settled his federal tax bill yet? As much as he crows about wanting to send more to DC, he's still holding back about a billion dollars...

OK, a specific boondoggle - the Chevy Volt. To illustrate why the Chevy Volt is a boondoggle, we need to point out that its primary fuel is coal. Evil, dirty, nasty coal - so dirty that its name is never spoken by the President. When you plug it in the wall, the electricity that is stored in it's battery is generated by a coal fired power plant which accounts for 80% of the power plants online. In the environmentalists' own words, not an environmentally friendly solution. We're not going to pick on the Volt right now, we're going to target another Obama favorite - solar.

When we say solar, the first thing that comes to mind is Solyndra. Solyndra (the now bankrupt solar company) was good for $500 million in federal donations all by itself. Solyndra folded because the costs associated with manufacturing solar panels domestically, makes it prohibitively expensive to install and run. The technology has not caught up with market expectations.

Personal experience informs this observation. Living in southern California, it made sense to explore solar power as an alternative to the high energy prices provided by the local electric company. Of the quotes received, the low end was $33K, and would not guarantee full self- sufficiency. None, as far as we can determine guarantee full self-sufficiency once air-conditioning is factored in for the summer.

The lowest quote that came with an expectation, but not a guarantee of full self-sufficiency was $54K. There is, as far as I can tell, no upper limit on what could be spent. Granted this is California, and the numbers may be different in less costly states, but those are the numbers that I received.

On average, our electric bill is about $400.00. Multiply by 12 months gets us to $4800.00. Multiply that by 10 years and you get $48K - still not up to the price of the "expected" self-sufficient system. You would need to add on nearly another two years before there is a break even point with what would be paid to the local utility. That is a horrible return on investment.

The solar industry has gone into 2 business models to address this bad economic news. The first goes after the niche environmental customer. Price is not an issue, the environment is. These are the affluent, educated professionals who will buy, just to make a statement - the kind of person who buys a Prius, or a Volt. Solar companies focusing on this type of customer are doing reasonably well out here.

Then there are the companies that do what they can to hide the costs involved. This has been done in a number of ways. Initially prices were lowered by buying the solar panels from China, which has much lower labor costs. This can shave 20 - 30% off of the total installation cost, but solar is still prohibitively expensive for most families, even at the lowered cost.

Certain companies have tried a sideways approach of free equipment installation and"leasing" the solar equipment. The lease would work at terms of about 70% of the average consumers electric bill, provided that their average bill is over $150.00 - apparently the break even point. Sounds like a win for the consumer, but you're not really buying the equipment, you never own it, and lease terms can and will change on a yearly basis.

The newest approach is being plastered all over the airwaves in SoCal. We don't even have to identify the company. If you do a half hour of Talk Radio once a week, you've heard the commercials. The company "gives" you a solar system, and instead of paying your local utility, or paying a set monthly fee for an equipment lease, this company installs an electric meter. You pay for the power. Just like you do now. Only less. For now.

They do not quote a rate, and if the local utility is a guide, it can change at any time. Right now they can undercut the utility in the hopes that solar becomes more profitable over time. It costs about 6 times as much to generate power via the sun than by fossil fuel. The solar pricing formula works because of the tiered pricing schedule used by the local utility to nudge down electricity use during peak hours. without the tiered pricing, solar cannot compete.

The solar company is running a bet on increased profitability in the future. They are undercutting the price of the local utility in the hopes of drawing enough customers to be competitive with the local utility. Summing up, at least in the short term they are operating at a loss. What happens when companies operate at a loss? Solyndra. Bankruptcy.

Should the company fold, those solar panels installed on your roof (that you don't own), become company assets to be liquidated to pay creditors. We can't imagine those removing the solar panels will work with the same care as those who installed them. Or be required to repair your roof. The panels will not stay there at the agreed price because the new owners of the company will not operate at a loss. Rates will rise to meet costs plus a profit. We are not bashing capitalism, just explaining how it works. Seems that there are even Republicans that don't understand that concept lately.

Common Sense Dictates

We have stated before and often, that we believe that an "all of the above" strategy should apply as we reduce our dependence on foreign oil. We believe that wind and solar should be used where practical. We note that domestic drilling and nuclear remain notably absent from the President's approach.

We think that the tanking of the Keystone XL pipeline was a disaster on many fronts - jobs, reliable energy and lower fuel prices. Right now gasoline sits at $4.00 per gallon in SoCal. Fuel oil is in shortage and spiking in costs in the northeast. There has been one new drilling permit issued in the Gulf of Mexico since the BP incompetence. Of the 75% of federal lands opened to drilling according to the SOTU, most does not have any oil to drill for. All of the offshore drilling approved by GWB and the Congress in 2008 remains shut down by the current administration. This is not an example of a serious commitment to energy independence, or even moving away from dependence on sources hostile to us. This is a matter of national security.

What we have is a series of payouts to supporters in "green energy" via the federal trough. It's a long list - Solyndra, GE, GM for starters. Seems most of them have connections to the Obama Administration as bundlers (Solyndra), benefactors (Immelt at GE) and supporters (the UAW who now owns GM). Crony capitalism is not policy. It is just corrupt.

We are not bashing solar energy either - we support it, wherever practical. What we are trying to do is illustrate what happens when the government tries to push a product that is not yet ready for market. Scams arise to generate profitability where none exists in the real world.

This speaks to the sub-prime mortgage crisis, where banks sought to minimize their risk in being forced make bad loans in the name of federal fairness. The same approach is being made in the push for solar. Now providers of solar energy are either targeting the willing market (the affluent environmentalists) , which is fair; or scamming people who will see little economic benefit, and possibly economic harm by participating in an idea that is not yet market ready. Common Sense stands against practices that stand to harm the general public. Common Sense stands against foisting bad ideas on people before they are good ideas. CommonSense would like to see a little common sense.

RLB