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Global Warming Bill Could Lead to Higher Electric Rates, Utilities Warn
Representatives for rural cooperatives, utility commissions and electric utilities tell lawmakers that if they are given allowances, they could protect consumers from higher energy prices.


Thursday, April 23, 2009
WASHINGTON -- Consumers would face higher electricity prices if Congress were to pass a global warming bill without giving a mechanism for utilities to emit greenhouse gases, electricity providers said Thursday.

Representatives for rural cooperatives, utility commissions and electric utilities told lawmakers that if they instead of power producers were given such allowances, they could protect consumers from higher energy prices.

These higher prices would be the result of legislation that would put a price on the gases linked to global warming.

"Revenues associated with pricing greenhouse gases would be returned to the very consumers who would be at risk for paying higher energy prices," said Richard Morgan, who leads the District of Columbia's Public Service Commission.

The providers say the best way to keep the electricity sector from passing on the cost of reducing greenhouse gases would be at first to give away allowances to emit pollution, not sell them, as proposed by President Barack Obama.

The president's budget assumes that allowances would be sold, and the projected $650 billion in revenue would be used to help people pay for higher energy costs and to develop new, more climate friendly energy sources.

"It should not be legislation that is designed to raise revenue. It should not be a revenue-enhancing endeavor. It should be something that is trying to achieve its objective of reducing carbon emissions in the country and that alone," said Glenn English, chief executive officer of the National Rural Electric Cooperative Association, which represents 42 million consumers in 47 states.

"Auction is not a good idea," he said. "We would discourage the committee from going down that road."

If the allowances are sold, electricity customers will face what Jeff Sterba, who spoke on behalf of the Edison Electric Institute, called a "double whammy" -- paying for both the price of the allowance and the cost of technologies to reduce emissions.

Suggestions on how to ease the downside of global warming legislation came during the third day of hearings on global warming and energy legislation. The additional costs to consumers, along with the loss of manufacturing jobs, represent significant stumbling blocks for Democratic lawmakers and the Obama administration, who hope to push the bill through Congress this year.

On Wednesday, Obama administration officials indicated it supports the bill, saying it would create jobs and invest in clean energy technologies.

A preliminary analysis released by the Environmental Protection Agency found that the average American household would pay an extra $98 to $140 a year to achieve the emissions reductions specified in the bill. That estimate assumed that 40 percent of the money collected from auctioning off emissions credits would be returned to American households to help pay energy bills.

The draft bill is silent on how these credits would be distributed to companies and which companies, those producing power or those distributing it, would receive them. That's critical in determining how much the legislation -- which would put a price on global warming gases -- would increase energy costs.

The draft bill calls for a reduction of greenhouse gases by 20 percent from 2005 levels by 2020, and 83 percent by mid-century. It also includes measures aimed at reducing the use of fossil energy such as requiring utilities to produce a quarter of their electricity from renewable sources, and invoking tougher standards to promote conservation.

Increased pressure is on Congress to act since the EPA declared last Friday that greenhouse emissions endanger public health and safety. The declaration is the first step toward regulating climate-changing pollution under the federal Clean Air Act.

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