Co-ops Ready To Help Craft Workable Climate Plan

by Glenn English, CEO, National Rural Electric Cooperative Association

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, however.

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� tax proposals.

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 market.

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 consumers.

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.