If You’re Broke, You Can’t Fix It
Economics Intrude on Global Warming Plans
2009 was supposed to be the year that brought laws regulating Earth’s climate—or at least those human activities suspected of abetting the myriad forces that conspire to make it hard to know how to dress three days ahead. Then with 2009 almost here, the economy blew up.
One result of that explosion has been an implicit and evidently widespread recognition that trying to fine-tune the climate by suppressing carbon dioxide emissions will bring economic consequences people notice long before anyone can say confidently that the planet is getting cooler, or warmer, or why.
Asked in the first week of January about limiting and selling allowances for carbon dioxide emissions—“cap-and-trade” legislation—House Speaker Nancy Pelosi (D–CA) told Energy and Environment News a bill was unlikely in 2009.
E&E News quoted Pelosi stressing a need to be “very careful, because we have to do it right, with cap-and-trade. We have to do it right. I don’t think we can take any chances. So this is going to take some very thorough scrutiny as to how we go forward.”
Asked about timing, Pelosi told E&E News, “I don’t know what the timetable will be. A lot of that will relate to how quickly we get through the [economic] recovery, whatever else we’re doing, and when the bill will be ready. I don’t think it’s ready.”
On the Same Page
The same article said House Energy and Commerce Chairman Henry Waxman (D–CA) would take the lead on cap and trade but added he “has not spelled out his plans.” Rep. Ed Markey (D–MA), a senior member of Waxman’s committee and “Pelosi’s point person on global warming issues,” gave a noncommittal answer about legislative prospects.
One week later, a New York Times headline read, “Economy May Delay Work on Obama’s Campaign Pledges.” The story said then-President-elect Obama “and his Democratic allies in Congress are preparing to delay some of the promises he made on the campaign trail to avoid political distractions and focus on reversing the economic slide.” A five-item list included “restricting carbon emissions.”
In between, three people helping shape decisions about Wisconsin’s climate legislation addressed the Wisconsin Electric Cooperative Managers Association in Madison.
All three made it clear that a weakened economy has narrowed options for policymakers hoping to cut CO2 emissions. A legislative package was expected soon, perhaps by the end of this month. But it was also clear that economic concerns meant the package would include only part of the recommendations from Governor Doyle’s global warming task force.
Public Service Commission (PSC) Chairman Eric Callisto said since the task force issued its report last summer, “Obviously the world has changed dramatically in terms of economics.” Callisto said the legislation “will focus on key recommendations but not all recommendations.”
“We may need to take one or two cracks at this and maybe some things don’t make sense after they’ve been reconsidered,” he added.
The chairman of the Assembly Committee on Energy and Utilities also voiced economic concerns when questioned by Mark Pendergast, general manager of St. Croix Electric Cooperative.
“Every day we deal with people who have their backs to the wall, people who have lost jobs, had foreclosures, and can’t pay their electric bill as it is right now, without these new costs added on,” Pendergast said, asking that global warming policies be sensitive to families who can’t make ends meet.
State Rep. James Soletski (D–Green Bay) replied that legislative deliberations must recognize that “These are all wonderful ideas and they’re all good things but can we afford them and is there another way of doing them.”
The chairman of the Senate Committee on Commerce, Utilities, Energy and Rail invited managers to “have your accounting people look at these costs and show us the impact on the bills.”
Senator Jeff Plale (D–South Milwaukee) said people already unable to pay their electric bills must be considered at “every single step of implementing the task force recommendations.”
What Train, What Track?
With a nod to past legislatures keeping energy issues from becoming a partisan football, Plale said he was “going to try to keep this absolutely as nonpartisan as possible.”
However, it was uncertain whether his or Soletski’s committees would be the ones to review the coming bill or bills.
The two indicated that with energy utilities the primary targets of legislative action, they hoped to obtain committee jurisdiction over the proposals—Soletski said, “I’m doing my darndest”—but at press time legislative maneuvering continued.
Against that backdrop, Plale told the managers, “Environmental groups are already trying to take this further,” lobbying for measures that would add more costs for electricity users.
The content of an eventual wide-ranging draft—or of multiple, narrowly defined bills—is “very much a work in progress with a lot of moving parts,” Plale said.
All three took care to show their awareness of an inherent tendency in global warming proposals to affect electricity consumers by driving up costs already rising sharply in recent years.
Callisto, whose job involves examining and turning thumbs up or down on electric utilities’ revenue requirements, said it plainly:
“Utilities can’t carry the water for everybody,” he said. “Electric utilities account for one-third of the CO2 emissions in Wisconsin and those with the other two-thirds need to step up.”
The Details
At this writing it’s too soon to know exactly what proposals state lawmakers will consider, but three high-profile ideas seem certain to be included and it appears the PSC and utility committee chairs would be untroubled if a fourth is kept out.
Wisconsin’s renewable portfolio standard (RPS) mandating 10 percent of electricity needs be met from renewable sources is virtually sure to be adjusted upward. Callisto acknowledges “great economic implications with getting to the current 10 percent by [the statutory deadline of] 2015,” and a proposal to speed things up and reach 10 percent by 2013 is “probably not doable,” but he foresees less difficulty reaching 25 percent by 2025, calls this “a bedrock principle,” and says it would be “tough to back off.”
Soeltski says “25 by 25” can be done if it’s broadly supported. “We can reach that but it’s going to be an expensive proposition,” he says.
Lifting Wisconsin’s effective prohibition on new nuclear plants is likely, especially if expanded RPS and energy efficiency standards are in the package. Soletski, a former nuclear plant employee, calls the economics favorable if the full life of a plant and associated efficiencies are considered.
Plale’s view is, “We’ve got to look at nuclear. [Under current law] the PSC can’t even think about it. They can’t even think about thinking about it. [But] if we’re going to be serious about reducing the carbon footprint, that’s a way to do it.”
A third component may be statewide standards for siting wind farms. Callisto says Wisconsin has 300 to 600 megawatts of reasonably priced wind-generation capacity available to develop but blocked by local restrictions that vary from place to place. He suggests legislation granting local government permitting authority for projects below the PSC’s regulatory threshold of 100 megawatts and non-utility–owned projects.
All three chairmen appear content leaving out state or regional cap-and-trade provisions, preferring a national program. Callisto calls this a “top 10” priority for the Obama administration, while conceding, “They will probably need two years working it through Congress.” Plale calls it something “we can punt to the federal government.”
As the most direct attempt to suppress CO2 emissions and drive them back down below 20th century levels, a cap-and-trade program would likely be the biggest, most expensive piece of any bill and could ignite more controversy than the nuclear issue.
The End
It’s worth recalling that the Wisconsin Legislature has been grown up enough to keep the 1990s fad of consumer-unfriendly utility restructuring from becoming entangled in partisan warfare, even during times of notably bitter rivalries.
With climate legislation’s potential to raise electricity costs, hammering the whole economy, the premium on maintaining state lawmakers’ enlightened approach to energy issues may be even greater than when Enron stalked the land.
Jeff Plale told co-op managers last month that the hardships of people already struggling to pay electric bills must be considered at “every single step of implementing the [global warming] task force recommendations.”
Even by way of addressing a completely separate issue—organized opposition killing a nuclear power project in Pepin County during the 1970s and early ’80s—Jim Soletski underlined the critical value of affordable electricity.
“I think for the Northwest part of the state, [the area’s] development was stifled for a long time because it didn’t have a ready source of reasonably priced power,” he told the managers.
Eric Callisto spoke first but said what might fittingly have been said last: “This can’t all be on the backs of utility ratepayers,” the PSC chairman said. ---Dave Hoopman |
