The Hill - Industry Groups Target Utility-Focused Climate Plan

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By Darren Goode

Industry officials are attacking plans to focus greenhouse gas emission reductions on power plants, one day after Senate Majority Leader Harry Reid (D-Nev.) gave new life to the idea.

The complaints from representatives of electrical co-ops and chemical producers focus on the higher energy costs that could result from the plan, and say power plants should not be signaled out for new restrictions.

"We do have serious reservations about that approach," Glenn English, a former Oklahoma Democratic congressman who now heads the National Rural Electric Cooperative Association (NRECA), told The Hill.

"We do not think it's a fair or equitable way just to single out one industry." His group does not stand alone in this assessment, he said. "There is significant concern among members of the electric utility industry about being singled out," English said.

English and other NRECA officials shared their concerns with Sen. John Kerry (D-Mass.) Tuesday night. Kerry and Sen. Joe Lieberman (I-Conn.) have floated a 667-page draft plan that focuses on reducing greenhouse gas emissions from the utility sector.

A Kerry aide said it would be premature to discuss the evolving plan as changes continue to be made.

The Edison Electric Institute (EEI), the main trade association of investor-owned electric utilities, is meeting with Kerry Thursday to talk about the draft plan.

Sen. George Voinovich (R-Ohio) told reporters Wednesday that EEI, which was onboard with the idea of doing a broader climate bill that forces emissions cuts across the economy, is "now having second thoughts" about whether it would be willing to do a scaled-back carbon-pricing plan focused on the electric utility sector.

Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) has also floated a draft carbon-pricing program focused on utilities but sources on and off Capitol Hill say it is more likely that Reid would use the evolving Kerry-Lieberman proposal as a base instead of Bingaman's. Bingaman has not been aggressively shopping his proposal and has even questioned whether it could get 60 votes. He and his aides have emphasized he may not even officially offer a proposal.

Kerry and Lieberman had initially tried to push through a broader carbon-pricing plan affecting the utility, manufacturing and transportation sectors but Democratic leaders have determined that scaling it back to a utility-focused proposal gives them a better chance at getting 60 votes in the Senate.

But English said the idea "exacerbates the problem for those regions of the country that have generation that is coal-based." This, in turn, helps make it more "complicated finding a solution rather than simplifying it."

Concern is also coming from those industries that are major electricity consumers.

"Our analysis of a utility-only approach really exposes us to higher energy prices because inevitably you're going to have to send a price signal to the utility industry that will inevitably be passed on to their customers," American Chemistry Council (ACC) President and CEO Cal Dooley told The Hill.

Dooley said it would also lead to increased demand for natural gas, which will further increase the cost of the feedstock the chemical industry uses in its production.

"This proposal we are absolutely certain would contribute to a loss in jobs in the chemical industry," Dooley said. He said he is basing that off of a review of Bingaman's draft and an ongoing review of the latest Kerry-Lieberman draft.

"It is very difficult to generate the resources that are needed to provide the transition assistance to energy intensive industries," he said.

ACC -- as well as other manufacturing industries particularly prevalent in the Midwest -- is working through Sen. Sherrod Brown (D-Ohio) to produce language protecting their businesses from jobs being outsourced and other economic hits.

Brown is looking for manufacturers to have the ability to opt-in to a carbon-pricing plan and also wants language allowing a tariff to be issued against developing nations like China if they do not mandate similar carbon restrictions.

"I want to vote for this bill," Brown told reporters this week, emphasizing how green jobs in a broader Senate energy and climate package could help his state and region. "I know it's great for jobs, I now it's good for the environment, I know it's good for weaning ourselves off of foreign oil."

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