Energy, Environment and Tech committee get Cap and Trade overview

Rich Walje, President of Rocky Mountain Power, spoke about the federal cap and trade issue before the interim joint legislative committee on Energy, Environment and technology.

- Rocky Mountain Power serves customers in southeast Idaho. It customer-base is about 50% industrial.
- Fifty percent of the power it produces comes from coal-based generation.
- It is also the 2nd largest owner and operator of wind power in America.

Walje said Rocky Mountain Power supports the need to reduce carbon emissions and other greenhouse gas emissions but does not support a cap and trade program like the Waxman-Markley legislation that passed the U.S. House of Representatives. The issue is not renewable versus non-renewable energy. It’s about the best way to reduce carbon emissions. Walje suggests giving Rocky Mountain Power a target for reduction and letting the company figure out the best way to get there.

Walje noted the federal legislation being discussed does not take into account the growth rate in the need for electricity. There is no need for the trading associated with capping carbon emissions. Under Waxman-Markey, a company is given an allocation to emit one ton of carbon. It requires an emission allowance for every ton of carbon, not just the amount that is above the carbon cap. Waxman-Markey would only allow Rocky Mountain Power 55% of the allocations it would need. The company would have to buy the other 45% on the market. Those costs would be billed to its customers. An estimated $25 per ton for carbon equates to an average 16% price increase to the customer. This is before any costs to make changes that would actually reduce carbon. The average Rocky Mountain Power residential customer pays $3.00 a day for power. Those supporting Waxman-Markey point out that the cost is only as a much as postage stamp ($.44). They avoid mentioning that that is a cost per day which equals $13.38 additional cost per month. Under the House legislation, allocations go to companies that do not need them because they have lower carbon emissions. They sell them on the market to companies like Rocky Mountain Power that don’t get enough allocations--essentially transferring money from Rocky Mountain Power customers to the sellers of the allocations. None of this reduces carbon emissions, Walje says, it is, rather, a transfer of wealth. The trading regime is not limited to those who produce electricity. Wall Street will be involved and taking a cut.

Walje pointed out that 25% of the votes for Waxman-Markey in the U.S. House of Representatives came from New York and California. Is it a coincidence, he asks, that these are two states that will benefit the most from moving money? We can cap carbon emissions but with a cap and trade scheme, the customers pay twice: once for the trading costs and then again for the cost to actually reduce levels of carbon emissions. There is no economic development without electricity. Walje stressed the need to balance economic development, environmental impacts, and affordable electricity.

A member of the committee asked Walje why cap and trade won’t work for carbon reduction when it seemed to work well in reducing sulfur dioxide and acid rain. Walje responded that that program did not involve Wall Street traders. It did not give allocations to those who did not produce sulfur dioxide. In closing, Walje said that we don’t need the trading part of cap and trade to reduce carbon emissions. He would like to set up a plan to reach carbon reductions and work with the state to accomplish that reduction.

Neil Colwell of Avista Corporation made brief comments following Walje’s presentation. Avista, he says, is one of those companies that might be termed a “winner” in the cap and trade system because it doesn’t have coal generation. There would be less impact on its customers but there would still be a cost impact. If the price of allowances goes too high, the U.S. economy could suffer. Therefore, a reasonable ceiling on the price of emission allowances is needed. An allowance price floor may also be necessary to encourage investments in emission reduction technology. Avista supports allocation of allowances based on electricity output or sales and opposes allocation based on historic emissions. Allowances should be allocated to load serving utilities with the benefits passed on to customers. The Edison Electric Institute allocation compromise that splits the difference between emission-based and load-based allocation is reasonable. Colwell also commented that there were more solutions available in dealing with sulfur dioxide and acid rain.

Transmission Projects update to the Interim Committee on Energy, Environment and Technology, October 21, 2009

Paul Kjellander, Administrator of the Idaho Office of Energy Resources gave an update on transmission projects that cross the state. The Gateway West project by Idaho Power that crosses southern Idaho into Wyoming is the furthest along. The BLM is looking at the Environmental Impact Statement. Another Idaho Power transmission project, the Boardman-Hemingway project, has had some fits and starts but now there is good progress.

Another project has been permitted since 1996. Ellis Power took over the corridor before the internment camp at Minidoka became a National Historic Site. Ellis Power looked for an alternate route around the camp but there are efforts to add more land to the site. Objections to the route based on viewshed have been raised. The issue seems to be a way to stop the transmission line because the “viewshed” already includes a K-V line and distribution lines. It does, however, appear that there has been positive movement lately.

The Forest Service, BLM and the National Park Service have different approaches when it comes to transmission lines. Kjellander noted a need for a more unified and streamlined process for the utilities, stressing that transmission is vital to development of renewable energy.

With regard to transmission project, Kjellander noted that “bugs and bunnies, varmints and vermin" as protected by the ESA will be key issues.

He also noted that FERC backup authority is included in the Waxman-Markey bill but would only apply to the western states.

Kjellander pointed out that we cannot access a lot of federal land, but federal land will be a key piece in getting transmission built. There has been some work on mapping to guide developers on where the mitigation efforts would be least expensive on federal land. This must be coordinated among the states so that the gradation maps make sense. Right now federal policies are in conflict. The federal government supports renewable energy but has other policies that bar us from access to the land that is needed for transmission.

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