Jul 10 - McClatchy-Tribune Regional News - Robert Swift The Times-Tribune, Scranton, Pa.

Pennsylvania is launching a multiyear effort to wean itself from dependence on foreign oil with energy legislation signed Wednesday by Gov. Ed Rendell.

The new program provides $650 million in state aid to finance alternative energy projects such as wind and solar power and to help consumers reduce energy use, thus fulfilling one of Mr. Rendell's major second-term goals. The state will pay for the program by borrowing $500 million over two years and spreading $150 million in appropriations over eight years.

The Alternative Energy Investment Act will offer business capital to energy producers, rebates and loans to help homeowners and small businesses installing solar panels and loans to businesses and local governments that use renewable energy to heat or cool buildings and manufacture goods.

Mr. Rendell predicts the state commitment will attract $3.5 billion in private investment and create 13,000 "green-collar" jobs.

Mr. Rendell pledged to continue work on the unfinished items with his energy agenda -- providing consumers help when electric rate caps expire in Pennsylvania in 2010 and 2011, weaning utilities away from relying on oil and gas for generation and giving consumers access to "smart meters" and pricing plans to reduce their electric use. The governor and lawmakers agreed last week to leave those issues out of the state budget deal and tackle them in the fall.

"It is a moral imperative that we act promptly to protect consumers from these rate hikes," Mr. Rendell said.

A large chunk of the state energy aid for business investment will flow through the Commonwealth Financing Authority, an agency created in 2004 to oversee an economic stimulus package. CFA will distribute $165 million earmarked for alternative energy projects, $80 million for solar energy projects, $25 million for wind and geothermal energy projects and $25 million for new or renovated buildings that use renewable energy.

Austin Burke, president of the Greater Scranton Chamber of Commerce, sees an opportunity for Northeastern Pennsylvania through the program to tap an unused resource -- the trillions of gallons of water in abandoned anthracite mines flooded almost 50 years ago during the Knox Mine Disaster.

He hopes money in the geothermal energy earmark will go to projects to demonstrate how the mine pools can be used to cool buildings.

Mr. Burke is one of four legislative appointees on the CFA board and will vote on potentially hundreds of projects seeking state energy aid.

"Geothermal offers a lot of possibilities," he added. "I'm promoting it myself."

Another chunk of state aid will go to help homeowners and small business owners weatherize their buildings and support a state heating program for low-income residents.

A $25 million earmark will help utilities install pollution controls at coal-fired power plants.

Having the energy investment law in place will give Mr. Rendell bragging rights when the National Governors Association meets Friday through Monday in Philadelphia. The governors will hold a session during the conference on the nation's energy future.

Critics say Pennsylvania would be better off reducing the cost of doing business and leaving energy production to the free market.

"We keep the barriers high for new businesses and opportunities, and then we dole out taxpayer money that has been borrowed," said Matthew Brouillette, president of the Commonwealth Foundation, a market-oriented think tank in Harrisburg.

Contact the writer: rswift@timesshamrock.com