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Electric cooperatives oppose S. 1733, “Clean Energy Jobs and American Power Act”

November 3, 2009

From the National Rural Electric Cooperative Association

On the eve of the Senate Environment and Public Works Committee’s markup of S. 1733, “Clean Energy Jobs and American Power Act,” Glenn English, CEO of the National Rural Electric Cooperative Association, indicated in a letter to Senator Barbara Boxer that the association intends to oppose the bill unless substantial changes are made. 

While praising the efforts to improve the bill by several committee members, including Senators Max Baucus (D-MT), Amy Klobuchar (D-MN) and Tom Udall (D-NM), English expressed disappointment that even with the revisions, the plan is unfair to consumers and, in several respects, represents a step backward from the climate change legislation passed by the House in June. 

Writing on behalf of 930 electric cooperatives and their 42 million consumer members, English reiterated concern outlined in an earlier letter to Chairman Boxer that the formula for allocating emission allowances would be unfair to rural consumers in certain regions, primarily the Midwest and Southeast. 

Not only does the Senate bill retain the fundamentally flawed allocation formula included in the House version, the percent of total allowances given to the local distribution companies is reduced from 30 percent to about 25 percent.  According to government projections, 80 percent of the emissions reductions called for in the climate change proposals under consideration come from the electricity sector. Even with additional allowances secured for cooperatives by Senators Baucus, Klobuchar and Udall, preliminary estimates indicate cooperatives would receive 20 million fewer allowances in just the first year of the program under S. 1733.

English pointed to the bill’s attempt to protect consumers from volatility in the carbon market with a “Market Stability Fund” as an improvement over the House version, but urged the Senate to set a “clear upper limit on the cost of emission allowances.”  To protect consumers, “the legislation should include a strong cost containment mechanism that guarantees prices will not rise above a certain level, such as a safety valve or ‘hard’ price collar.”

English also asserts the new provision addressing the potential problem of overlap between this legislation and the Clean Air Act, while an improvement over the earlier version, is insufficient:  “it would be far preferable to provide the certainty required to include language in the bill that indicates the new law provides the sole legal and regulatory authority.”

English noted that “[m]ore than 600,000 electric cooperative consumer-members have asked their senators to ensure that climate change legislation is fair, affordable and technologically achievable. Our members support wise investments that diversify the nation's energy portfolio and make America more energy efficient and independent. But they are also concerned about the impact of greenhouse gas emission reductions on the cost of energy and their ability to pay higher electric bills.”