The House [Waxman-Markey] bill falls short of . . . equitable distribution . . . with its formula for allocating allowances to local distribution companies based 50 percent on emissions and 50 percent on sales. Unfortunately, the Senate bill currently under consideration includes the same 50/50 allocation provision. Under the proposed 50/50 formula, utilities that are more coal dependent will need to purchase even more allowances than they would have if all allowances were allocated based on emissions, and those higher costs will be passed on to their customers. Meanwhile, many utilities with relatively lesser emissions will receive sufficient allowances to completely cover their initial requirements. Thus, their customers will experience no price increases resulting from the legislation.The full letter can be read here.
We believe it is essential that we strive to formulate legislation that equitably distributes transition assistance across individuals, as well as states and regions and economic sectors. We urge you to ensure that emission allowances allocated to the electricity sector – and thus, electricity consumers -- be fully based on emissions as the appropriate and equitable way to provide transition assistance in a greenhouse gas-regulated economy.
Given that these are 14 Democrats, and the Senate leadership is going to need every vote it can get to pass any climate bill, we can be assured that the distribution will be shifted as they ask. But you are right if this makes you uncomfortable. The coal-dependent power companies these Senators are defending have been warned for years by groups challenging their decisions to build new coal-fired power plants that the cost of coal power was bound to go up. These groups have consistently included in their comments before state utility commissions, state departments of environmental protection and federal authorities in charge of signing off on the plants the idea that the power companies really should be considering moves to diversify their power portfolio to wind, solar and energy efficiency--suggestions that the power companies have almost uniformly resisted (despite what their web sites often say about renewable energy and energy efficiency). So it is pretty disingenuous of them to act sad and helpless now that they are finally facing the prospect of paying up.
It is also disingenuous for the power companies, and the Senators from states in which they are powerful, to act as if their primary concern are their customers, when the lion's share of the customer rate increases they ask for (and almost always get from state utility commissions) are for building new power plants that are guaranteed to make the power companies money, but that the customers don't necessarily need. (Rate increases for energy efficiency improvements, though often the subject of much teeth gnashing by Republican state legislators all of a sudden concerned with rate payers, too, are generally tiny--especially in light of how much power they free up on the grid.) I may even be justified in saying that this is galling, in light of the sort of things that power companies expect customers to pay for, like $15,000 dinners and corporate spa retreats, as this article from the Colorado Independent discusses.
At any rate, Reuters reports on the letter here, the Hill here, and the Wall Street Journal here.
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