July 2009
A Critical Message on Capitol Hill
by Keven Groenewold
In early May, roughly 3,000 electric cooperative leaders from across the country converged on Capitol Hill with a critical message for Congress—electricity must remain reliable and electric bills affordable.
In face-to-face meetings with lawmakers, the co-op representatives stressed that if climate change legislation wasn’t enacted, the U.S. Environmental Protection Agency would take matters into its own hands. In mid-April the agency announced it was ready to use the federal Clean Air Act to curtail the release of carbon dioxide and five other greenhouse gases (GHG) blamed for contributing to climate change. Believing the Clean Air Act “not well-suited” to addressing global climate change, electric co-ops are urging Congress to act on a simple, affordable, flexible, and effective solution.
Believing the Clean Air Act “not well-suited” to addressing global climate change, electric co-ops are urging Congress to act on a simple, affordable, flexible, and effective solution.
A proposed cap-and-trade plan being pushed by Congress would create a carbon market which would trade carbon allowances. This market would be designed to curb carbon dioxide and other GHG emissions. It would set a specific limit on such emissions from sources like power plants, factories, and refineries requiring those sources to account for all greenhouse gases with allowances. These allowances would then be given to the green house gas emitters or auctioned off to the highest bidder. Over time the number of allowances would decrease. This forces GHG emitters to either reduce emissions or pay an increasingly high price for scarce allowances.
The electric co-ops have two issues with this approach. The first is placing the allowance auction in the existing markets. An ever-shrinking number of allowances would be traded between companies. Unfortunately, under some parts of this plan the price to generate electricity from fossil fuels—a price directly tied to electric bills—could potentially fall into the hands of Wall Street speculators through the allowance auction. The question that comes to mind is: Do we really want to put our electricity and energy future into the same hands that over the last year have destroyed other markets around the world?
The allowances that are not auctioned are being allocated. This is the co-op’s second concern. These allowances are not being allocated fairly. Utilities on the west coast and in the Northeast part of the country receive far more allowances than they need. Since here in New Mexico we receive far fewer allowances than we need, we could buy some of California’s extras to meet our needs.
This allowance market was created out of nothing. So, the extra cost created goes right to the monthly electric bill. The excess credits for sale in places like California amounts to nothing less than an unwarranted windfall profit. The net affect of the currently proposed process would be a significant transfer of electricity costs from the urban coastal states to the heartland states.
This is unfair. The cost of reducing GHGs should not shift from one region of the country to another. It must favor Main Street over Wall Street. And above all, it must keep the consumer’s electric bill as affordable as possible.
Join thousands of other electric co-op consumers who are already involved in the “Our Energy, Our Future” grassroots campaign. Learn how your personal story can impact energy legislation on a national level by visiting www.ourenergy.coop.
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