Where are we on Cap and Trade?
Manager's Corner
Much of the media is reporting on the death of Cap and Trade as a means of addressing climate change. Cap and Trade was a mechanism that was successfully used to reduce the amount of sulfur and nitrous oxide from power plant emissions.
Unfortunately legislators from the Northeast and California tried to create a cap and tax scheme as a means to tax the power bills of rate payers from the Midwest and Southeast and transfer these dollars to rate payers in their home districts. Thanks to the efforts of cooperative members like you across the country, we were able share with legislators the drastic impacts this would cause on our rates. I want to thank both Senators Harkin and Grassley for standing up for cooperative members and refusing to support legislation that would, through our rates, transfer our dollars to ratepayers on the coasts.
While I am happy to share this with you, I realize this whole debate is far from over. While the failure of Congress to pass climate change legislation has been reported in the news, as big a story is the recent news that the Environmental Protection Agency (EPA) has rewritten the rules covering sulfur and nitric oxidize emissions. With a stroke of a pen, EPA has gutted one of the most successful programs that has drastically reduced these emissions from power plants.
Under the old rules, utilities that reduced their emissions earned credits for their reductions. They could then sell these credits to other emitters that had not met their targets. The net result was a cost effective way to reduce pollution. The new rules have made these credits practically worthless and will require all emitters to install costly equipment. In our case, Associated Electric Cooperative, (AECI) our power supply cooperative, has lost over $300,000,000 in emissions credits through this new ruling. While this will not impact our rates immediately, it will over time, as we add expensive new equipment to comply with the new rules.
The greatest problem we face in all of these regulatory issues is uncertainty. Complying with regulations requires huge sums of money. We also know that any new generating plants will cost at least a billion dollars and years to build. Not knowing what rules we need to operate under makes these decisions an enormous gamble. I hope you will continue to help us get this message through to our elected officials. We will not be able to do it without you.