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REMC says 'cap and trade' could drive up energy costs

May 20, 2009
Harrison REMC officials are urging their customers, as well as all Hoosiers, to encourage legislators to work with electric co-ops, electric municipals and investor-owned utilities to find a way to keep electricity affordable and reliable while at the same time meeting federal public policy goals designed to reduce the amount of carbon dioxide released into the atmosphere.

The request for action comes as the Obama administration is proposing a cap and trade program that is designed to limit and reduce the amount of carbon dioxide emitted by everything that uses fossil fuels.

The "cap," David Lett, CEO of Harrison REMC, said, is "a legal limit on the quantity of greenhouse gases that a region can emit each year. Under a cap and trade program, a company must have an emissions permit for every ton of carbon dioxide it releases into the atmosphere."

Companies would be allowed to "trade" their permits as needed.

"These companies who can reduce their carbon dioxide emissions cheaper can sell their extra permits to companies that are not able to make reductions as easily," Lett said, thus creating a supply-and-demand marketplace.

While natural gas, propane and fuel oil will all be impacted, coal will be the larger target, Bob Geswein, also of Harrison REMC, said.

According to statistics released in November 2006 by the Energy Information Administration, Indiana was one of the top states in coal-produced energy for the previous year, with 94 percent generation. Only West Virginia was higher, at 98 percent. North Dakota and Wyoming were at 95 percent, and Utah also recorded 94 percent.

At the opposite end are Rhode Island and Vermont at 0 percent, California and Idaho at 1 percent, Oregon at 7 percent and Alaska at 9 percent.

REMC officials contend that states and regions heavily dependent on coal generation will be disproportionately impacted by the proposed regulation.

"Indiana would be hit especially hard in the coming decade since 94 percent of our electricity is generated by burning coal, which cannot be substantially replaced with carbon-free sources anytime soon," Lett said.

"The benefit (of the legislation) would be a benefit to all and carried on the backs of a few," Geswein said.

As the cap and trade program is currently proposed, Lett said Indiana consumers could see a tax imposed that would raise their electricity rates up to an average of $50 per month.

"The economic ramifications of such a tax will be devastating to families already struggling to make ends meet and threatens the viability of energy dependent manufacturers and other employers in our state," he said.

Lett and Geswein talked about the cap and trade proposal to Chamber of Commerce of Harrison County members a couple of weeks ago at a Business at Breakfast event hosted by REMC in Corydon.

The United States has been "leading the way" to cleaner air, Geswein said, noting there were 301 million tons of pollutants released in 1970 compared to 141 million tons in 2005.

Geswein said he and other electric co-op officials are not against the proposed legislation, but he believes Wall Street will determine the price.

"The cap and trade program has the potential to be a tax burden on the Midwest," he said. "It's not fair as it's being considered."

Geswein said he believes Congress will act soon on the proposal as "the legislation is on the table."

For more information about proposed energy policies, visit www.ourenergy.coop.

The site can also be used to send a message to Congress about the cap and trade program proposal.

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