Last fall, the political winds that
brought in a new Administration and bolstered the majority in Congress
also brought in sweeping new energy proposals,
including proposals to address climate change.
The issue of climate change remains
intensely controversial — and political — but the hard reality is that
nobody wins if this fight continues indefinitely.
Our nation’s 900+ electric
cooperatives and their 40 million member-consumers — as well as other
utilities including the big power companies and the municipal utilities
— are facing a power crunch. Many electric utilities need to build new
power generation to meet growing demand, but the drawn-out fight over
carbon dioxide emissions has hobbled utility planning; it is difficult to
finance new power plants when no one knows the future cost of
carbon-intensive fuel options.
Carbon dioxide is going to be
regulated whether or not Congress acts. Two years ago, the Supreme Court
instructed the Environmental Protection Agency (EPA) to determine whether
greenhouse gases should be considered pollutants under the Clean Air Act.
In March, the new EPA administrator, Lisa Jackson, submitted a proposed
“endangerment finding” covering CO2 emissions from the transportation
sector to the Office of Management and Budget. In short, the regulatory
process is already in motion.
Any attempt to regulate carbon under
this law, which was intended to address discrete local and regional
air-pollution problems, will create a glorious disaster.
We need Congress to step in with a
workable plan. I have told leaders in both Congress and the Administration
that electric cooperatives are ready to work with them to craft an
economically sustainable approach that will set realistic reduction
targets and, at the same time, protect consumers.
Make no mistake: Even under a
best-case scenario, any regulation of carbon is going to increase the cost
of electricity. The details of the law will determine how great that
increase will be. This being the case, the government has an obligation to
deal honestly with the public about the additional costs we are being
asked to bear. I strongly believe our elected officials must be
straightforward and accept responsibility for the consequences of climate
change legislation. Early signs are not encouraging,
All the proposals involve putting a
price, or tax, on national carbon dioxide emissions in order to achieve
reductions. But who will set that price? And how? And who will pay?
One approach is a carbon tax, which
some economists argue has the advantages of simplicity, economic
certainty, and accountability. The administration and House leaders are
taking a different approach, putting forward carbon “cap-and-trade”
As not-for-profit utilities whose
first obligation is to our member-consumers, the full-auction approach
must be considered a non-starter. A full auction would allow Wall Street
traders to set the price of allowances, which down the road would
determine electricity rates. Prices could vary greatly, and if this market
were unregulated, we could see the “Enron effect” on the carbon
For instance: Where would the auction
revenues go? To hedge funds? To shareholders? Or to consumers? More likely
they would be siphoned off for new government programs such as health
care. Some members of Congress are now talking of returning the revenue to
If our political leaders are serious
about climate change, they will ensure this revenue is used to help
develop technology that will allow the use of carbon-emitting fuels and
reduce the impact on consumers.
All electric cooperative
member-consumers, including you and me, need to be prepared to ask our
elected officials point-blank: “Where do you stand on climate change —
are you with us on Main Street or with those on Wall Street?” Keep
asking the hard questions, and expect honest answers! And for more
information, go to www.ourenergy.coop.
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