U.S. Utility Chiefs Predict `Catfight' on Greenhouse Gas Rules
By Jim Polson
June 19 (Bloomberg) -- U.S. utility executives, four months after voting unanimously in support of federal legislation to reduce greenhouse gas emissions, predicted a fight among themselves over the specifics.
``It's going to be a real catfight,'' Armando Olivera, president of FPL Group Inc.'s utility unit, Florida Power & Light, said in a panel discussion yesterday in Denver during the annual convention of the Edison Electric Institute, the industry's trade group.
Olivera said the best approach would be a fee tacked onto electricity prices based on the amount of carbon dioxide emitted to generate the power. American Electric Power Co. Chief Executive Officer Michael Morris spoke in favor of a cap-and- trade system in which emission allowances would be granted based on the existing output of gases that cause climate change.
Four other utility leaders on the panel described variations on these ideas and agreed they will disagree as Congress or the U.S. Environmental Protection Agency gets closer to setting specific rules.
Federal lawmakers have introduced at least seven proposals to reduce greenhouse gas emissions. Some Democrats, after taking over leadership of both the House and Senate in January, said climate change legislation should be tackled this year. The Supreme Court in April decided that the EPA must consider carbon dioxide emissions.
Edison Electric in February rallied unanimous support among its membership for a statement that they ``clearly recognize the growing concerns'' on climate change and support congressional action on the issue. Days earlier, a United Nations research effort concluded that the human role in the warming of the Earth was nearly certain, and the Bush administration said the causes of climate change were no longer debatable.
`Quack Quack'
Morris of American Electric, based in Columbus, Ohio, said the carbon fee favored by FPL's Olivera is really a tax and will be unacceptable to politicians and the public.
``Quack, quack,'' Morris said, invoking the saying that if it looks like a duck, walks like a duck, and quacks like a duck, it must be a duck.
Richard Kelly, chief executive officer of Minneapolis-based Xcel Energy Inc., proposed a national clean energy standard that would allow power companies to earn tradable credits for power from wind farms, new coal plants with technology to cut carbon emissions, or new nuclear plants, which emit no carbon dioxide.
This approach would provide incentives for new generation facilities that don't pump out carbon dioxide without penalizing existing plants that emit greenhouse gases, Kelly said.
Fuel Type
Disputes among power companies derive from differences in the fuels they use to generate electricity, said Jeff Sterba, chief executive officer of Albuquerque, New Mexico-based PNM Resources Inc., who took over the rotating chairmanship of Edison Electric Institute today.
A carbon fee would make power from nuclear plants, wind turbines and hydroelectric dams cheaper relative to the output of coal plants. Natural gas would also be favored, because it emits about half as much carbon as coal for the same amount of power.
It would favor companies such as FPL, the biggest U.S. producer of wind power, and Exelon Corp., the biggest owner of nuclear plants. It would hurt companies including American Electric, which burns more coal in its power plants than any other U.S. utility.
It would be simpler to administer a carbon fee, Olivera said, and it would be fair to customers of utilities such as Florida Power & Light, which gets its electricity from nuclear and natural-gas plants.
Cap and Trade
Most congressional proposals so far would create some kind of cap and trade system. This could be designed to gradually make it more expensive to run the worst-polluting power plants.
It is attractive because it would, if properly implemented, encourage the most cost-efficient reductions in greenhouse gas emissions wherever they can be achieved.
Cap-and-trade has been implemented in Europe, where nations are already trying to meet greenhouse gas limits established in the Kyoto Protocol, the international treaty that the U.S. declined to implement. It was also used to cut power plant emissions of sulfur dioxide in the U.S.
``Cap and trade gives you very little for very high expense,'' said Kelly of Excel, which owns Denver's utility.
David Ratcliffe, chief executive officer of Atlanta-based Southern Co., the biggest U.S. power producer, said he doesn't expect the federal government to adopt climate change rules before 2010. Some Congressional Democrats want global warming as a campaign issue in next year's national elections, and a new president, regardless of party, would need a year to set direction at EPA, he said. |
