Legislative Focus Increases on Possible Utility-Only Cap and Trade

As Congress returned from the July 4 recess, legislative efforts on cap-and-trade focused on the possibility of a utility-only program. Majority Leader Harry Reid (D-NV) announced that he intends to bring a bill to the floor during the week of July 26 that will include four components: the Gulf oil spill, clean energy, energy efficiency and cap-and-trade. The only form of cap-and-trade that seems possible at this point, however, is one that applies only to the electric utility industry.

Reports circulated this week that representatives of selected utilities and environmental groups were meeting together to see if agreement on utility cap-and-trade is possible. The head of the National Rural Electric Cooperative Association, however, stated that he is opposed to a utility-only approach, and the Edison Electric Institute has not taken a public position on such an approach.

The talks became more complicated given the desire of the utilities to also develop a legislative approach for addressing emissions of the “other 3 Ps,” or pollutants, meaning sulfur dioxide, nitrogen oxides, and hazardous air pollutants that, like carbon dioxide, are emitted from coal-fueled electric generation stations. Environmental groups are said to be adamantly opposed to what they characterize as “give-backs” or “concessions” on 3-P emission reductions that they expect under the numerous regulations that EPA has proposed or has planned. Meanwhile, Senator Carper expects to move to mark-up soon on his own bill that would cap and reduce 3-P emissions.

Congressional activity is now racing against the clock as the August recess nears. The prospects remain extremely fluid.

22 July 2010