By: Steve Shurts, General Manager Owatonna Public Utilities
(Permission given to post this email)
Dear OPU Customer:
This blind copy email is being sent to several of OPU’s customers to advise you of a recent report issued by a group of Midwestern utilities, including the Southern Minnesota Municipal Power Agency (our supplier). It analyzed the economic impacts of a federal cap-and-trade program. The study is reported in a story which I have copied below. The salient point is that we do not want to see a carbon tax or true auction. While I personally am opposed to any CO2 program, the only one that makes a modicum of sense is the one mentioned by Raj Rao of the Indiana Municipal Power Agency. The type of program he mentions allocates credits to current producers of CO2 and then they are capped at that rate. If a utility (or any producer) wants to produce more CO2, for example, by building a coal-fired plant, they must buy credits from others or find means to reduce the production of the CO2 in their system. This is a way to spur technological improvements without immediately penalizing those utilities that use a lot of coal to generate electricity.
Please understand that SMMPA’s electric generation is heavily weighted with coal, so a CO2 tax or auction will hit us very hard. SMMPA and OPU have been and will continue to do what we can to lobby our congressional delegation and to take proactive measures to keep your costs down. However, I urge you to also contact our senator(s) and representatives in Washington DC. Your voices are important.
I must take a minute to tell you about another point I have been telling our politicians in St. Paul and DC. I’ve heard from some of them that the rising tide will lift all boats; i.e. every utility will get hit with higher costs under a tax or auction. Here are the two points I make:
§ First, if an Owatonna business competes with a company in the Pacific Northwest where a huge portion of the generation is from hydro plants, your competitor’s electric rates will not be affected nearly as much. There are pockets of low-carbon generation and high-carbon generation. So Owatonna loses.
§ Second, if an Owatonna business competes with a company in a foreign country, particularly China, your competitor will likely not even get hit with a carbon tax. Owatonna loses again.
My point is that the tide will lift boats to various levels; some much higher than others. Sorry for the long email, but thank you for your time.
Sincerely,
Steve Shurts General Manager
Owatonna Public Utilities 208 S Walnut Ave Owatonna MN 55060 507.446.5402 http://www.owatonnautilities.com/
Federal cap-and-trade program for CO2 could 'devastate' Midwestern economy, study findsMidwestern consumers can expect significantly higher energy costs under a federal greenhouse gas (GHG) cap-and-trade regime, and "could face alarming economic impacts" under some program designs, a group of utilities said yesterday. A study conducted by the group, called the Midwest Consumer Utilities, said a cap-and-trade program that auctions all allowances would have the most severe impacts. The utilities include Indiana Municipal Power Agency, Madison Gas and Electric Co., Missouri Joint Municipal Electric Utility Commission, Missouri River Energy Services, Southern Minnesota Municipal Power Agency and WPPI Energy. The study projects the potential rate impact of various legislative approaches on the utilities' customers, including businesses and industry, and on the economies in their respective states. It shows that, depending on the auction price of allowances, the average rate increases for consumers in the seven Midwestern states studied could be up to 79% from 2012 to 2030 under a cap-and-trade program that uses a 100% auction method that does not refund auction revenues back to those customers. Some states would experience even larger annual average increases, the study said. Even if the cap-and-trade program were designed using a method that allocates 100% of allowances at no cost for rate mitigation purposes, rates could still rise an average of up to 37% for this same period, the analysis found. "Under any new carbon legislation, a no-cost allocation process with a cap on total emissions is the best way to keep electricity cost increases to a minimum and to limit greenhouse gas emissions" said Raj Rao, CEO of the Indiana Municipal Power Agency. "An auction or carbon tax will cause electricity prices to go up significantly and hurt all customers in the Midwest region," he said. "Congress is about to embark on an important national debate," said Roy Thilly, CEO of WPPI Energy. "We hope the sober results we present today help guide the outcome." The method chosen to distribute allowances and recycle auction revenues will dramatically affect the cost of compliance borne by consumers and the general economy, particularly in coal-intensive states in the Midwest, the utilities said. "The results may be much more extreme if cost-effective new technologies do not materialize or are delayed," they said. "Unless new electric technologies can be deployed first, the Midwest is where cap-and-trade will really turn out the lights on the job market," said Duncan Kinchloe, general manager and CEO of the Missouri Joint Municipal Electric Utility Commission. Cap-and-trade programs limit the amount of pollutant emissions produced by some sectors of the national economy, while offering flexibility in how those targets are met. In theory, they are intended to achieve emissions targets in the least cost manner and mitigate substantial wealth transfers, between and among customers and regions, that can accompany the introduction of GHG reduction strategies. "The no-cost allocation of allowances is essential to help those states that face the greatest challenges in moving to a low carbon economy," the Midwestern utilities said.
(Permission given to post this email)
Dear OPU Customer:
This blind copy email is being sent to several of OPU’s customers to advise you of a recent report issued by a group of Midwestern utilities, including the Southern Minnesota Municipal Power Agency (our supplier). It analyzed the economic impacts of a federal cap-and-trade program. The study is reported in a story which I have copied below. The salient point is that we do not want to see a carbon tax or true auction. While I personally am opposed to any CO2 program, the only one that makes a modicum of sense is the one mentioned by Raj Rao of the Indiana Municipal Power Agency. The type of program he mentions allocates credits to current producers of CO2 and then they are capped at that rate. If a utility (or any producer) wants to produce more CO2, for example, by building a coal-fired plant, they must buy credits from others or find means to reduce the production of the CO2 in their system. This is a way to spur technological improvements without immediately penalizing those utilities that use a lot of coal to generate electricity.
Please understand that SMMPA’s electric generation is heavily weighted with coal, so a CO2 tax or auction will hit us very hard. SMMPA and OPU have been and will continue to do what we can to lobby our congressional delegation and to take proactive measures to keep your costs down. However, I urge you to also contact our senator(s) and representatives in Washington DC. Your voices are important.
I must take a minute to tell you about another point I have been telling our politicians in St. Paul and DC. I’ve heard from some of them that the rising tide will lift all boats; i.e. every utility will get hit with higher costs under a tax or auction. Here are the two points I make:
§ First, if an Owatonna business competes with a company in the Pacific Northwest where a huge portion of the generation is from hydro plants, your competitor’s electric rates will not be affected nearly as much. There are pockets of low-carbon generation and high-carbon generation. So Owatonna loses.
§ Second, if an Owatonna business competes with a company in a foreign country, particularly China, your competitor will likely not even get hit with a carbon tax. Owatonna loses again.
My point is that the tide will lift boats to various levels; some much higher than others. Sorry for the long email, but thank you for your time.
Sincerely,
Steve Shurts General Manager
Owatonna Public Utilities 208 S Walnut Ave Owatonna MN 55060 507.446.5402 http://www.owatonnautilities.com/
Federal cap-and-trade program for CO2 could 'devastate' Midwestern economy, study findsMidwestern consumers can expect significantly higher energy costs under a federal greenhouse gas (GHG) cap-and-trade regime, and "could face alarming economic impacts" under some program designs, a group of utilities said yesterday. A study conducted by the group, called the Midwest Consumer Utilities, said a cap-and-trade program that auctions all allowances would have the most severe impacts. The utilities include Indiana Municipal Power Agency, Madison Gas and Electric Co., Missouri Joint Municipal Electric Utility Commission, Missouri River Energy Services, Southern Minnesota Municipal Power Agency and WPPI Energy. The study projects the potential rate impact of various legislative approaches on the utilities' customers, including businesses and industry, and on the economies in their respective states. It shows that, depending on the auction price of allowances, the average rate increases for consumers in the seven Midwestern states studied could be up to 79% from 2012 to 2030 under a cap-and-trade program that uses a 100% auction method that does not refund auction revenues back to those customers. Some states would experience even larger annual average increases, the study said. Even if the cap-and-trade program were designed using a method that allocates 100% of allowances at no cost for rate mitigation purposes, rates could still rise an average of up to 37% for this same period, the analysis found. "Under any new carbon legislation, a no-cost allocation process with a cap on total emissions is the best way to keep electricity cost increases to a minimum and to limit greenhouse gas emissions" said Raj Rao, CEO of the Indiana Municipal Power Agency. "An auction or carbon tax will cause electricity prices to go up significantly and hurt all customers in the Midwest region," he said. "Congress is about to embark on an important national debate," said Roy Thilly, CEO of WPPI Energy. "We hope the sober results we present today help guide the outcome." The method chosen to distribute allowances and recycle auction revenues will dramatically affect the cost of compliance borne by consumers and the general economy, particularly in coal-intensive states in the Midwest, the utilities said. "The results may be much more extreme if cost-effective new technologies do not materialize or are delayed," they said. "Unless new electric technologies can be deployed first, the Midwest is where cap-and-trade will really turn out the lights on the job market," said Duncan Kinchloe, general manager and CEO of the Missouri Joint Municipal Electric Utility Commission. Cap-and-trade programs limit the amount of pollutant emissions produced by some sectors of the national economy, while offering flexibility in how those targets are met. In theory, they are intended to achieve emissions targets in the least cost manner and mitigate substantial wealth transfers, between and among customers and regions, that can accompany the introduction of GHG reduction strategies. "The no-cost allocation of allowances is essential to help those states that face the greatest challenges in moving to a low carbon economy," the Midwestern utilities said.
No comments:
Post a Comment