'Green' bill could result in higher utility costs

In a recent newsletter to Conway Corporation customers, CEO Richard Arnold presented his concerns about Senate Bill 2191, a bipartisan measure to cut greenhouse gas emissions. Senators Joe Lieberman (I-Conn.) and John W. Warner (R-Va.) introduced the bill in October.

Arnold said he has concerns that, if the bill is passed, not only will it mean an increase in rates for Conway Corp. customers, it could be devastating to the U.S. economy and even fail to have the desired effect.

According to an online press release linked to Lieberman's Web site, "the America's Climate Security Act is projected to reduce total U.S. greenhouse-gas emissions by as much as 19 percent below the 2005 level (4 percent below the 1990 level) in 2020 and by as much as 63 percent below the 2005 level in 2050."

"With all the irrefutable evidence we now have corroborating that climate change is real, dangerous and proceeding faster than many scientists predicted, this is the year for Congress to move this critical legislation," Lieberman said in the press release. "If we fail to start substantially reducing greenhouse gas emissions in the next couple of years, we risk bequeathing a diminished world to our grandchildren. Insect-borne diseases such as malaria will spike as tropical ecosystems expand; hotter air will exacerbate the pollution that sends children to the hospital with asthma attacks; food insecurity from shifting agricultural zones will spark border wars; and storms and coastal flooding from sea-level rise will cause mortality and dislocation."

"In my 28 years in the Senate, I have focused above all on issues of national security, and I see the problem of global climate change as fitting squarely within that focus," Warner said in the press release. "Today, we introduced a balanced bill. Senator Lieberman and I found a good, sound, starting point that sends a significant signal that the U.S. is serious about taking a leadership role in reducing its greenhouse gas emissions."

Arnold said his concern stems from the bill's proposal to establish a cap and trade system.

Under the system, a carbon dioxide emission limit would be assigned to facilities. Utilities emitting less than their allowances would be able to sell their excess to utilities that exceed their allowances. The cap would be lowered periodically.

"In cap and trade markets, prices can swing wildly as they have in the European Union's emission trading market " Arnold wrote.

In an interview on Thursday, Arnold said the cap and trade market could have serious implications for community-owned utilities such as Conway Corporation and its customers.

"Unlike investor-owned utilities, we can't absorb the cost of those fluctuations. In our case, it's going to affect rates," he said. "Our customers are our owners, so we don't have the profit incentive that investor-owned utilities have. That's why we're watching this, because we think it's going to be significant. I just think a cap and trade system is a bad idea for this country."

Arnold prepared estimates of the cost that would be passed on to customers if allowances were purchased. He used a conservative estimate of $30 per ton of carbon dioxide, he said, adding some estimates exceed $100 per ton. He estimated the annual average residential increase would be $301 by 2012; $471 by 2030; and $534 by 2051. He pointed out the increase does not account for inflation, increased cost of fuel and other factors.

He said he believes whatever rate payers would pay for allowances should instead be directed toward research and development to allow utilities to keep using coal as a source of energy. The United States is sometimes referred to as "the Saudi Arabia of coal," he said, but burning coal produces CO2 at a higher rate than burning natural gas. If the bill is passed, Arnold said, utilities will convert to burning natural gas for energy to reduce their emissions.

"We could end up at a deficit for natural gas and end up fuel dependent on other countries some of them not friendly," he said.

Arnold said not only residential customers will be affected but also commercial and industrial rates. He predicted that a rate increase for industries could worsen the "erosion of our industrial and manufacturing base to India and China."

"If our cost for electricity were to double, how many jobs will continue to erode and go to those countries that don't have those issues?" he said.

He added, "I hope they (Congress) consider if the reduction of CO2 will really have the desired impact, not only on the environment, but that the costs associated with the program don't devastate our economy."

If the bill is passed, Arnold said, Conway Corp. will help customers do energy audits of their homes to ensure there is no waste.

"If we know cost increases are coming, people will need assistance in managing their bills," he said.

Also, Conway Corp. will be examining new technologies that will allow "smart metering" a process in which customers receive an alert to turn off high-energy appliances, such as an air conditioner, when prices are highest.

"It keeps our prices low, and we give credit to the customer for helping us," he said.

Another measure Conway Corp. can take is to work with builders on a certification process for new homes to make them as energy efficient as practical, he said.

"We're not at all anti-environment. We're pro-consumer. We want to make sure they're heard," he said.

(Staff writer Rachel Parker Dickerson can be reached by e-mail at rachel.dickerson@thecabin.net or by phone at 505-1277. Send us your news at www.thecabin.net/submit)