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Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: lorne who wrote (62016)	3/26/2009 4:06:17 PM
From: lorne	2 Recommendations Respond to of 224750

US carbon cap to raise power prices-Moody's Tue Mar 24, 2009 reuters.com LOS ANGELES, March 24 (Reuters) - U.S. electricity prices are likely to rise 15 to 30 percent if a national cap on carbon dioxide emissions is instituted, according to a report by Moody's Investors Service. And "the vast majority" of the burden of those higher costs will be borne by residents as large industrial users are likely to be successful in lobbying U.S. lawmakers for special rates and tariffs, the report dated March showed. If carbon dioxide (CO2) emissions are priced at $20 per metric ton, it would add about $48 billion in costs for the electric utility sector, Moody's said. Moody's said federal carbon legislation is expected in 12 to 18 months, and implementation of any program is still several years ago. "The conventional wisdom in Washington is that legislation may emerge from the House within the next few months and the critical nitty-gritty details may emerge from the Senate by the end of the summer," said the report, whose primary author is Jim Hempstead, a Moody's analyst and senior vice president. For utilities, the near-term credit impact will be neutral, Moody's said, mainly because companies will have a chance to adjust financing policies and mitigate risks. It's clear, Moody's said, that operating costs for utilities will rise due to the costs of mitigating for carbon dioxide emissions. Regulated utilities and public power agencies and cooperatives that will have the right to pass on costs to consumers will be less exposed in the long-term than coal-dependent project financing entities and wholesale merchant generators, Moody's said. "The United States generates approximately 6 billion metric tons of carbon dioxide every year, which could result in approximately $120 billion of new annual revenues for the U.S. Treasury, assuming a flat rate of $20 per ton," Moody's said. President Barack Obama and congressional leaders want to cut U.S. greenhouse gas emissions -- which are dominated by CO2 emissions -- by using a market mechanism, such as cap and trade. In such a system, owners of power plants emitting CO2 would have to hold permits for every ton emitted. Unused permits would be sold in a market, encouraging utilities to cut emissions by efficiency or using natural gas or other generation sources that emit less CO2 than burning coal. U.S. power plants are the biggest generator of CO2 emissions, producing about 2.4 billion tons a year, or almost twice the amount produced by cars, trucks and airplanes. Power generation accounts for about 40 percent of U.S. CO2 emissions. CO2 comprises most of the U.S. greenhouse gas emissions -- about 84 percent -- that blamed as a cause of global warming. (Reporting by Bernie Woodall; Editing by Marguerita Choy)