The United States Congress is debating legislation that could dramatically increase the cost of your monthly electric bill. The American Clean Energy and Security Act of 2009 (H.R. 2454) could alter forever the way that electricity is generated and consumed in the United States. Climate change legislation is supported by the Obama administration and House and Senate leadership.

Consumer advocates, trade associations and political parties on both sides of the issue have flooded the TV and airwaves, encouraging citizens to contact their Congressman.

Tennessee’s electric cooperatives believe you need to know the facts about the legislation and what it means to you and your monthly electric bill.

Here are the most significant aspects of the bill for the electric utility industry:

 

After the committee passed the bill in late May, Glenn English, CEO of the National Rural Electric Cooperative Association, commended chairmen Waxman and Markey;

"NRECA believes the collegial manner in which the committee members worked to mark up the legislation has produced, step by step, a better bill than the discussion draft released in late March. As I testified in April before the Energy and Commerce Committee, NRECA supports developing affordable, simple, and flexible climate change legislation. However, the bill does not yet meet that test.”

“We greatly appreciate all members of the Energy and Commerce Committee who have worked hard to improve the legislation, and we look forward to continuing to work with members of the jurisdictional committees to further improve the bill and make it a piece of legislation that electric cooperatives and a majority of the U.S. House of Representatives can support.”

Tennessee has two representatives on the House Energy and Commerce Committee. Congressman Bart Gordon was involved in committee decisions that helped make the bill less costly to electric co-op members. Congresswoman Marsha Blackburn participated during the committee markup, offering proposals that addressed the impact of the legislation on ratepayers.

There is no question that the bill has improved since the first draft. The bill aggressively attacks carbon emissions that are widely believed to cause climate change. The bill also invests in new renewable sources of generation and research and development into cleaner coal technologies.

There is also no question that the bill will increase the cost of electricity in many parts of the nation. Cooperatives will be forced to purchase carbon credits in order to provide enough electricity to service their members. Much work remains before the bill can achieve its stated goals and keep electric bills affordable.

In one of the more concise summaries of the problems with the bill, Mid-American Energy Holdings CEO David Sokol said, "The Waxman-Markey bill is a cap and trade program that will force our customers to pay two expensive costs. First, they will pay the cost of emissions allowances purchased on a complex auction market that will do nothing to reduce greenhouse gas emissions; and second, they will pay the cost of replacing our existing fossil-fuel generation facilities with low-carbon alternatives."

The renewable energy provisions and efficiency provisions have been improved significantly. The renewable energy standard, for example, does not apply to electric cooperatives that sell less than 4,000,000 mwh of electricity per year, exempting most co-ops. Tennessee has one co-op, The Middle Tennessee Electric Membership Corporation, which exceeds that level of sales and could face additional penalties if they don’t meet the renewable standard.

Including temporary free allowances in the bill is a step in the right direction to protecting electric cooperative consumers from unnecessarily increasing electricity bills, but the formula for allocation of free allowances for emission credits is not equitable. The Committee adopted a formula developed by big investor owned utilities, and that formula would not cover the emission credits needed for the coal generation that is vital for rural America. Chairman Waxman has agreed to hold an additional hearing to look at the allocation.

The cap on carbon emissions has been lowered somewhat. However, we believe, as do many members of the committee that they are still overly aggressive in the early years of the program and will need to be lowered.

TECA and NRECA are not opposed to energy legislation that addresses climate change. In fact, we strongly support investments in clean coal technologies that could help us take advantage of an abundant source of energy that exists in our own country. We also support investments that will strengthen our electric grid and create more renewable energy sources, such as solar power and wind turbines.

However, that’s not going to solve all of the nation’s energy problems. Senator Lamar Alexander recently rebutted those that give, “the impression. . .that we can run this big, complex country on electricity from the wind, the sun and the earth. That may be true one day, Alexander said, but it probably will be 30, 40 or even 50 years down the road.”

Congress needs to consider your needs as they work to complete this legislation. We need the flexibility of planning for the future without bankrupting the present. If Congress gets this wrong, you could easily be saddled with a $30 - $50 per month increase in your electric bill – just to pay for the cost of the climate change legislation.

What can you do? Let your congressman know how you feel. Call, e-mail or write and let them know that any climate change legislation needs to be as simple and flexible as possible; but most importantly, it must keep electricity affordable for all of us.

In the end, government doesn’t bear the costs of this bill – you do.

• Make sure the emissions caps, particularly in the first decade of the program, are consistent with the availability of technology - the caps in the current bill remain too stringent;
• Ensure that emission allowances for the utility sector are distributed based on emissions to minimize the additional costs to the consumers who will be most affected by the reductions required by the bill;
• Improve the cost-containment provisions of the legislation to avoid price shocks; and
• Make other improvements to the bill that will make it more workable, affordable, and flexible.