‘Cap and trade’ passes U.S. House
Kansas City Business Journal
Controversial environmental legislation passed the U.S. House of Representatives in a close vote on Friday, promising to dramatically reduce emissions and — opponents say — drive up electric rates.
The American Clean Energy & Security Act of 2009 passed in a 219-212 vote and now heads to the Senate.
Among several measures, the bill would implement a system known as cap and trade, which would set caps on greenhouse-gas emissions — to be lowered in time — and entities would have to buy allowances to exceed it or pay penalties. Emissions would be capped at 42 percent below 2005 levels by 2030 and 83 percent by 2050. Proponents say it would create jobs, decrease the nation’s dependence on foreign oil and combat global warming.
Kansas City Power & Light Co. on Friday expressed strong opposition to the bill, to which a few hundred pages were added days before its passage. The legislation could increase local electric rates by about 50 percent by 2012 and by an additional 70 percent by 2020, Chuck Caisley, KCP&L’s senior director of public affairs, said last week. KCP&L has been supportive of such environmental measures, he said, but the legislation’s deadlines are impractically aggressive.
KCP&L now will turn its attention to the Senate, as well as to educating customers, Caisley said in a Monday interview. The Senate probably will work on the legislation slightly past the July 4 recess, he said.
“We will work to find a path to passing legislation that achieves the goal but just doesn’t hurt disproportionately the Midwest,” Caisley said.
The Congressional Budget Office said Friday that the legislation would increase revenue by $873 billion from 2010 through 2019 and would increase direct spending by $864 billion during that time. It also said that several mandates would “well exceed” the annual guidelines set in the Unfunded Mandates Reform Act. On June 19, it estimated that the program would cost the economy about $22 billion in 2020, or about $175 a household.
The nonprofit American Council for an Energy-Efficient Economy said the act could save $1,050 a household by 2020.
But KCP&L said Midwestern states would be hit hardest because abundant coal there makes power cheap. The Kansas City-based utility, which serves more than 800,000 customers in the area, probably would have to retire some of its coal-fired fleet in 2012 and try to find alternatives, Caisley said. But the local infrastructure for wind and natural gas power is not yet prepared to replace it, he said.
KCP&L backs an industry proposal that would rather see caps start in 2015 and be more gradually tightened afterward. The industry contends that doing so would meet the same 2050 target the act proposes but that it would cost less and allow for infrastructure to be built, for emerging green energy technologies to advance to commercially ready phases and for utilities to raise the money to complete the projects, Caisley said.
The House vote split along party lines, with 211 Democrats and eight Republicans voting in favor of the act and 44 Democrats and 168 Republicans opposing it, according to the House clerk’s Web site. It split exactly along party lines in Kansas and Missouri.
KCP&L also wants fully regulated utilities, such as itself, to get more allowances and a price ceiling to be placed on allowances.
The U.S. Chamber of Commerce opposes the legislation in its current form, according to a Thursday letter to Congress.
On Wednesday, KCP&L received regulatory approval for a $59 million Kansas rate increase.
KCP&L is a subsidiary of Kansas City-based Great Plains Energy Inc. (NYSE: GXP), which ranks No. 8 on the Kansas City Business Journal’s list of area public companies.
