Public Power - June 2008 - (Page 22)

Climate Change Solutions would be able to buy, sell and trade emissions credits. Some free emissions credits would be allocated and then phased out in favor of auctioning credits. “If hedge funds get control of the market system, God knows what is going to happen to the price of electricity,” he said. Grantham-Richards is optimistic Congress will put the proper repercussions in place to punish manipulation. “I would trust that they would put in place, hopefully with the assistance of people who understand these markets, strict rules that will prevent that and if it should occur, very stiff penalties for the guilty” she said. “If we can have million dollar penalties for reliability standards, we should at least have similar penalties for abuses in a cap and trade market that actually produces money on a day-to-day basis and could lend itself to abuse. “ Sen. Dianne Feinstein, D-Calif., wants the same. In January, Feinstein introduced a bill—the Emission Allowance Market Transparency Act of 2007—to make the sale of emissions allowances fair and transparent. Knowing the Lieberman-Warner bill could generate more than $7 trillion in allowances from 2012 to 2050, Feinstein’s legislation requires several measures, including: “the collection and publication of information needed for price transparency and discovery; the prohibition of market manipulation and other abusive practices; the prevention of excessive speculation that could lead to unnecessary increases in emission allowance prices; and the imposition of appropriate penalties for those who violate these requirements.” Amendments offered to S. 2191 will most likely address controversial issues, including the role nuclear energy will play in fighting climate change, conflicts about international cooperation and the ability of state climate control programs to preempt a federal program, according to James Williams, a staff lobbyist covering the issue for APPA. “I don’t think our state is just ready to roll over and be pre-empted by federal legislation,” said Schori. A lawsuit filed late last year by California, Schori’s home state, attempted—and failed—to force EPA to take action to curb the state’s greenhouse gas emissions from motor vehicles. Under the Clean Air Act, California can adopt environmental standards that are stricter than federal rules if the state obtains a waiver from EPA. The federal agency has turned down the state’s request for a waiver. However, California has not given up: 16 states, led by California, sued EPA. The states want the agency to regulate carbon emissions. Whether it is through a state pre-emption or a federal program, making these reductions could prove costly. The cost of electricity would jump 44 percent in 2030 and another 26 percent in 2050 if the act, as it is now written, becomes law, according to an analysis of the bill by the EPA. Under the bill, domestic offsets and international credits are limited to 15 percent, with additional awards for bonus allowances for carbon capture and storage and set-asides for agriculture, forestry, sequestration, landfill and coal mine methane mitigation. However, if domestic offsets and international credits were unlimited, prices would fall by 71 percent compared to the bill as written, said the analysis. On the other hand, if domestic offsets and international credits are not allowed, then allowance prices will increase by 93 percent, compared to the bill as written. Task force members support the use of both domestic and international offsets to help utilities maintain reliability, while preventing windfall profits from reaching the hands of any one player. “I argue for the broadest definition of offsets, because not everyone has the same tools in their toolbox” said task force member Lonnie Carter, president and CEO of Santee Cooper in South Carolina. So the question for the task force remains: “if we have to accept cap and trade, what are we willing to accept?” said Gallagher. Setting up an economy-wide system where emissions are largely given away for PUBLIC POWER 22 JUNE 2008 http://www.dcbnet.com

Table of Contents Feed for the Digital Edition of Public Power - June 2008

Public Power - June 2008 Contents Perspective 10 Questions Finding Common Ground on Climate Change Solutions A Patchwork Approach to Renewable Energy Whose Grid Is It Anyway? The Little Utility That Could Benchmarking Customer Service Can Prairie Hay Power Your Town? Storming the Control Room Investing in the Smart Grid Coming of Age: Superconducting Cables Community Broadband Economic Development Customer Service Human Resources For Governing Boards Safety Parting Shot

Public Power - June 2008

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