Energy Firms Eye Legislation

Speakers at last week's annual Cambridge Energy Research Associates' conference in Houston discussed what kind of climate change bills will be considered by Congress.ξ CERA Chairman Daniel Yergin often asked panelists whether a carbon tax or cap-and-trade system might be made into law.ξ Either way, emissions would be more costly, and those costs would be ultimately borne by the consumer, according to David Joos with Michigan's CMS Energy.

"For every $25 a ton in our case represents about a 15 per cent increase in the all-in price of electricity to our customers."

Prices will be driven by technology development to capture and dispose of carbon and what kinds of carbon offsets might be available.ξ Some companies are buying carbon offsets from oil companies that sequester CO2.ξ One carbon offset represents the reduction of one metric ton of carbon dioxide.ξ But Joos says his power company in Michigan is not ready.ξ

"When we get a real carbon cap-and-trade process in place, that might make sense.ξ It's not something that we have been involved with at this stage.ξ It's not a mechanism that we can recover the costs of, and it's not clear what the value of those things are.ξ And I think that's why CEOs generally now in the industry are calling for some certainty around this whole regime so that we can make those kinds of decision going forward."

Larry Makovich with CERA says carbon trading infrastructures are starting to appear.

"They do buy and sell carbon credits, and you're wondering, 'well, if there's no law in place, who's doing that?'ξ And so we actually looked into that, and if you'll remember, during the campaign people would talk about, you know, 'we got here carbon-free,' even though they just drove up in a car and so forth.ξ And so actually, there is a considerable amount of demand out there for people who can do something and claim that it's carbon-free because they've bought offsets, and it has created this marketplace."ξ
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James Miller with PPL Corporation says the higher cost of power, the more a customer's behavior is going to be modified.

"And it's a delicate walk, because we in the industry have been signaling Washington for years now to be wary and be understanding of the cost to the consumer of this issue.ξ This is a huge cost."

But Miller says consumers are already stressed.

"A lot of people will say 'well, can we get a country so that electricity demand is going down?'ξ I'm not sure I want a country where electricity demand is going down and down and down.ξ Electricity is a big part of indicating of how we're growing in this economy."

Panelists say consumers who are being forced to spend less in a down economy may not be as likely to put money towards extras like carbon offsets.ξ

Ed Mayberry, KUHF Houston Public Radio News.
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