Public Power - June 2008 - (Page 24)

Climate Change Solutions free to electric utilities makes sense, say task for members. By the principles developed, APPA supports minimizing the amount of allowances auctioned to no more than 5 percent of total allowances. This would pose the least costs to consumers and ensure reliability. Proceeds from auctioned credits should go to research and development, energy efficiency and toward the mitigation of cost impacts on consumers, says the group. If the system allocates the majority of allowances, the group debates who— even among fellow public power utilities—should get those allowances. There is often disagreement between those executives representing high-emissions utilities and those that are greener, according to James Dickenson, CEO of Jacksonville Electric Association. “Those that produce a lot of carbon think you ought to get allowances based on carbon produced,” said Dickenson. “Others think you should get it from megawatt-hours produced.” Jacksonville is one of those heavy emitters—producing 60 percent of its power from coal and 20 percent from petroleum coke, or petroleum mixed with natural gas—and Dickenson’s stance on the issue is that divvying up allowances based on megawatt-hours produced would create windfall profits for those producing clean megawatt hours, because they can sell their allowances on the market to utilities that need them. “The customers of large utilities will inevitably end up paying the most for power,” said Dickenson. Gary Stauffer, a task force member and executive director of the Nebraska Municipal Power Pool, also in the nation’s “coal belt,” agrees. “If we are trying to solve the problem then the money should go where the problem is: where the carbon is emitted.” If you are allocating based on carbon, then you are just saying you want to change the emissions of those entities, said Tilton. How the emissions are allocated will probably be up for debate in the future. For now, the task force aims to keep the 24 JUNE 2008 decided principles broad to avoid conflicts of interest among APPA’s membership, while they learn more about the needs of their fellow utilities. “Diverse viewpoints always give a person an opportunity to better understand ideas and positions they did not support before,” said Grantham-Richards. “We all have different political realms to deal with and have to adapt to meet those mandates. The task force meetings provide us with an opportunity to understand our colleagues’ positions.” However, Grantham-Richards, like most public power CEOs, is concerned about staying afloat financially amid a cap-and-trade system. “My biggest concern as an owner of a coal facility (and gas) is ensuring we can afford the energy once we pay for the credits,” she said. “The latest material I have read indicates prices up to $45 a ton with the financial houses taking that into consideration for your financial ratings, which could impact our cost of money for future generation construction.” “I’m sure other task force members have this concern and others, such as meeting state mandated renewable portfolios at a reasonable cost to their customers,” said Grantham-Richards. Among the principles developed thus far by the task force, is the recommendation to establish cost-containment measures—or a mechanism to avoid spikes in compliance costs by setting a maximum price for emissions allowances and mitigating price volatility. Along those same lines, members want the federal government to conduct regular reviews of the way allowances are doled out to prevent windfall profits for any one player. Profits that are made through auctioning allowances should be used to help utilities meet emissions mandates: through research and development, energy efficiency and the mitigation of cost impacts on consumers. To be fair, small units—those generating 25 MW or less—should be exempted outright from any cap-and-trade regime, says the task force. In addition, those who took action to reduce emissions after Jan. 1, 1994 up until federal climate change legislation is passed should get their due credit. Tax-based incentives for the development and deployment of renewable and clean energy facilities and programs should be provided to public power at comparable measure to others in the industry. Having these protections in place will allow U.S. industries to continue to compete in world markets and ensure U.S. jobs in light of heavy international competition, says the task force. In this area, APPA faces a challenge. In February—the last time the Internal Revenue Service allocated Clean Renewable Energy Bonds—of the 300 projects approved for allocations, only about 40 went to public power projects, while more than 200 went to other types of governmental borrowers. “These new figures from the IRS underscore the need for Congress to act quickly on the improvements to the CREB program that were approved by the House last year as a part of the energy bill, but excluded from final legislation,” said APPA President and CEO Mark Crisson in response to the IRS decision this past winter. APPA and its members will inevitably take up the CREB program again in the future – and again, long after the CEO Climate Change Task Force disbands. Most task force members predict federal climate change legislation will pass when a new president assumes the White House, although it could be sooner. When the federal law is signed, the task force will dissolve, while the issues they tackled will continue to evolve. “I think this is the number one topic affecting utilities, it affects the economy and businesses,” said Dickenson. “You have to be concerned.” To build on the work of the CEOs, APPA formed a “New Generation Group” involved in reviewing research on new generation technologies, sequestration, risk and pilot projects, said Grantham-Richards. Any task force member can participate in that forum. ❚ Laurel Lundstrom is production editor of Public Power magazine. PUBLIC POWER

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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