As part of a series of energy bills, Congress is considering a “cap-and-trade” approach to curb greenhouse gas emissions. That involves setting limits to the level of carbon emissions from industries which are actually producing useful commodities we need, like electricity.  Officials of the six area electric co-ops, however, are urging all consumers – regardless of their electric provider – that the move could actually be no more than a tax to fund the federal stimulus package.

“The public needs to cast a wary eye on these concepts,” said Kevin Quickery, CEO for United REMC, located in Markle.  “For example, the cap and trade proposal submitted as part of the Obama Administration budget is an expensive backdoor tax on consumers designed more to fund unrelated government programs than to address environmental concerns.”

Joining United REMC in the effort to make consumers aware of what might happen to their electric costs are Kosciusko REMC, Warsaw; LaGrange REMC, located in LaGrange; Noble REMC, headquartered in Albion; Steuben REMC, Angola; and Northeastern REMC, located in Columbia City.

Together those electric co-ops serve over 81,000 consumers in 17 northeast Indiana counties.  Those co-ops also serve a number of large industrial customers including General Motors, Allen County; Steel Dynamics, Whitley County; and Louis Dreyfus Commodities, Kosciusko County.

Collectively, co-ops across Indiana and the country fear the cap and trade approach will only escalate consumers’ monthly electric bills, and unfairly punish states like Indiana that have historically relied heavily on low-cost coal to generate electricity.

Currently, there are no specific cap and trade measures that have been introduced in Congress, but several legislators have made the issue a high priority.  It is expected that a bill on cap-and-trade could be introduced as early as late May, and some experts predict swift passage once introduced.

Cap and trade could impact all industries and manufacturers – not just electric utilities, the REMC officials contend.  Essentially, the initiative would have the government set standards for each company or utility regarding their carbon footprint and the level of greenhouse gases they are allowed to emit as part of their normal production.  If those levels are exceeded, the company or utility would be required to purchase carbon credits based on the amount of emissions they actually release. In addition, fines may be levied for being over the pre-determined emission threshold.

Complicating the issue is that under one proposal the emission allowances would be auctioned off through Wall Street brokers to the highest bidders.  In effect, those credits could be purchased by investors and re-sold at a profit to those companies or utilities needing them.  In the case of electric utilities, the emissions credits that will be set government and then turned over to Wall Street, would actually allow the highest bidder to buy the rights to operate within the electric industry.

Under the new administration’s plan, the cap-and-trade proposal originally was estimated to raise $645 billion between 2012 and 2019.  However, most recent estimates put that figure at $1 trillion.  The plan would make these ‘climate revenues’ the sixth largest source of federal income.  However, only a small portion of the new revenues will go toward energy investment and research, co-op officials say.  The lion’s share will be returned in the form of household tax cuts, meaning the plan would take away money from consumers through higher electric bills.

“Based on a middle of the road estimate – it could be higher, and it may be lower – the average electric bill could go up by $50 a month,” said Gregg Kiess, president and CEO of Northeastern REMC. “And depending on how that shakes out, it will not be just electric co-op customers.  All utilities will be facing the same situation, so it’s likely that all consumers will be impacted,” Kiess added.

“If the government needs to raise revenue to fund important national priorities, those taxes should be set by the government and collected by the IRS, not set by Wall Street to be collected by utilities,” said Glenn English, CEO of the National Rural Electric Cooperative Association (NRECA).  For its part, NRECA is actively encouraging consumers everywhere to speak out against cap and trade.

“As an industry, we recognize that global climate change is a huge issue, and electric co-ops across the country want to do our part,” said Steve Rhodes, CEO of Kosciusko REMC.  “We have repeatedly let it be known to our federal and state legislators we want to be part of the solution.  However, we have to be realistic and keep electricity affordable at the same time.”

As an industry, electric co-ops would favor other ways to deal with climate change legislation.  For example, co-ops would rather see a straight carbon tax to generate funds for initiatives such as renewable energy, clean-coal technology, and better ways to actually reduce emissions, Quickery said.  “A straight carbon tax would at least be a set figure – everyone would know up front what the cost would be.  The cap-and-trade approach is unpredictable, and is suspect to a bidding process which could get out of hand,” he said.  “It appears, at least at this point, that the cap-and-trade method is simply a way to pay for the federal stimulus package, at the expense of utility customers.”

Compounding the situation is the fact that Indiana gets over 90 percent of its electric power from coal and natural gas.  Hoosiers may end up paying higher utility rates due to the need for utilities to purchase a larger share of the emissions credits as compared to states such as California, which gets less of its energy from coal and fossil fuels. 

“Current cap and trade proposals would raise Indiana electric bills by at least 30 percent and the resulting public outrage would be wrongly focused on the utility instead of Washington,” Kiess continued.  “Politicians know this and that’s why they won’t call cap and trade what it truly is – a tax.”

Co-ops likewise have been proponents for more research into clean-coal technology.  Estimates have placed the country’s coal reserves at 250 years.  Technology is now available to burn coal cleanly to produce electricity, but the costs are prohibitive.  “Clean coal is a reality, but expensive,” Rhodes said.  “Improved technology, however, can change that.”

While many groups see alternative energy – wind, solar, etc. – as a “silver bullet” to solve the greenhouse gas dilemma, it will take years to build those alternatives to a level where they can have an impact.

Electric co-ops across the country are urging all consumers – regardless of their electric provider – to join a web-based effort to get a message to legislators.  The program – called “Our Energy Our Future” – provides information to visitors about these issues.  And in turn, visitors can send a message directly to their legislators in Washington.

“We encourage everyone to visit the website at www.ourenergy.coop to find out more about these pressing issues and to get a message to our congressmen and senators,” Quickery said. “It’s a grassroots effort to let legislators know that new public policy needs to be balanced with the need for electricity that’s affordable to everyone.”

The web-based program is easy to navigate.  All consumers are encouraged to participate – regardless of their electric provider.

Nationwide, electric co-ops are located in 47 states and serve over 40 million customers. Together, those utilities have the largest electric utility infrastructure in the entire country.

For more information, contact Kevin Quickery at 260.758.3155, ext. 21; Gregg Kiess, 260.625.3770; or Steve Rhodes, 574.267.6331