While the EPA has been aggressive in exercising its regulatory powers since the start of the new Administration, the Agency states it would prefer a Congressional solution. EPA Administrator Lisa Jackson notes that the Obama Administration “will not ignore science or the law any longer.”

Indiana’s electric cooperatives and municipal utilities are concerned that overly restrictive EPA regulations could damage a fragile U.S. economy and devastate coal-dependent states such as Indiana. Therefore, we remain resolute in our goal to work with Congress to address climate change in a fair, affordable and achievable manner.

As we approach the new year, the Partnership for Fair and Affordable Energy resolves to:

Work with Congress on fair, affordable, and achievable legislation. Toward that goal, significant improvements are necessary in both the House and Senate legislative language. Those include:
• A formula for distribution of carbon allowances to local distribution companies that is based 100 percent on emissions and is equitable for all regions of the country.
• Cost containment measures such as a safety valve that ensures future affordability of electricity.
• Reasonable emission caps and a timetable for transition that allows for the development of necessary technology to control and/or contain carbon emissions. Emission reduction targets that are too aggressive will make any program unaffordable and unworkable.

Eliminate regulatory duplication. The EPA announcement that carbon dioxide emissions pose a threat to public health is a bureaucratic and regulatory commitment to action. Lawsuits are guaranteed but unlikely to help. Thirty-nine such lawsuits have been filed to prevent implementation of rules and regulations for the Clean Air Act since 2000, and only once have the courts stayed the implementation of those regulations. In the end, if Congress acts legislatively, that action should supersede all federal, state and local regulation of greenhouse gasses.

Decide something. Our industry needs certainty. We need to know what types of generation will be permitted in order to prepare for future demand. It takes at least ten years to construct most fossil fuel baseload generation. Nuclear, a zero carbon generation source, will take even longer. Wind and solar have some value and shorter construction times, but they also have serious reliability constraints and cannot meet baseload power needs. Legislation that reduces carbon doesn’t have to be cap-and-trade. A fair and affordable solution could reduce carbon emissions by creating energy efficiency incentives and accelerating implementation of alternative energy, nuclear and clean-coal technologies.

Exercise our rights. You can learn more at www.fairpowernow.org. The website contains a great new video explaining the concept of cap-and-trade and how it will affect your electric bill. You can also register your opinion with members of the Indiana Congressional Delegation.

S. 1733, known as the Boxer-Kerry Clean Energy and American Power Act, has now been introduced. There are also signs that the EPA will begin regulating greenhouse gases through its own process. Last week, the EPA issued a proposed rule to regulate carbon dioxide and other greenhouse gas emissions from electricity generators and industrial plants. That came on the heels of final approval of a rule on economy-wide reporting of greenhouse gas emissions that is effective January 1, 2010.

Clearly, there is still a sense of pressure among many in Washington, DC to move forward with sweeping climate change legislation and/or regulation. The question becomes when. We know that the EPA is active. On the legislative front, the Congressional calendar is extremely busy. Several committees other than Sen. Boxer’s Environment and Public Works Committee will be weighing in on the climate debate in the Senate, but how long that will take is another unknown factor. Senators Boxer and Kerry have now released the details of their legislation and the EPA has provided an economic analysis of the bill. Senator Boxer is holding three days of hearings (October 27th, 28th, and 29th) and has tentatively scheduled a mark-up of the legislation in mid-November. All things being equal, that timeframe is tenuous at best.

Additionally, there is a lot of activity behind the scenes, with the political aspects of this issue being negotiated at every turn. Once a final bill emerges out of Committee and is set for floor debate, there will need to be 60 votes in favor of the bill. Many specific details of climate legislation that are important to certain legislators in their home areas are becoming part of the closed-door discussions. Regional issues and economic impact are key issues to be addressed.

The Boxer-Kerry Senate bill continues to cause members of the Partnership for Fair & Affordable Energy concern. The bill does not provide for the kind of ratepayer protection that is needed in Indiana, or the Midwest for that matter. It still benefits the East and West Coasts, at our expense. In these continued tough economic times, please make your voice count! Talk to Senators Lugar and Bayh and let them know that we need to have a fair and affordable approach to climate change legislation.

Members of the Partnership for Fair and Affordable Energy agree that we must all work together to address environmental concerns and move climate change legislation forward. At the same time, we believe it can be accomplished without placing an undue financial burden on citizens who live in coal-rich states.

Senators Lugar and Bayh recognize the devastating effects that the House version of the climate change bill would have on the citizens of Indiana, a state that depends on coal for 95% of its electricity. During difficult economic times such as these, consumers are ill-prepared to take on the financial burden of a carbon-reduction policy. But a cap and trade bill can be written so as not to overly penalize coal-rich states. We applaud our Senators, and ask them to continue working with their colleagues to craft a fair and affordable carbon bill.

In December, the world’s climate experts will meet in Copenhagen to discuss the global nature of this issue. It’s important to remember reducing carbon has to be a worldwide, and economy-wide, effort. Americans can take drastic steps to reduce our carbon footprint, but if other countries, especially those with emerging industrial bases, don’t do the same, our improvements will be nullified. This is a global issue, not simply an American issue.

No matter the timeline, we need to make our voices count. Talk to your friends and neighbors about this issue, and keep checking back to www.fairpowernow.org for the most current information.

One improvement in the bill was an adjustment from a 100 percent auction of carbon emission allowances to a partial auction, with some free allowances being given to carbon emitting entities. However, Indiana utilities are being “shorted” more than 35 percent beginning in 2012. Too many allowances are being provided to non‐emitting sources and special interest groups, such as merchant generating plants that do not directly serve customers. The end result is a redistribution of wealth from the Midwest, which is heavily reliant on coal for electricity generation, to the East and West coasts, which are not.

The distribution of allowances to East and West coast states and merchant plants will do nothing to reduce carbon emissions and will dramatically increase Indiana electric rates.

Under the current allowance allocation formula, Indiana’s not‐for‐profit utilities receive less than 65 percent of allowances needed to meet consumer needs, requiring us to purchase more than 35 percent of the allowances in an unregulated and speculative trading market.

As it now stands, the ACES Act could have a devastating effect on Indiana ratepayers and our state economy. Electric rates would increase at least 23 percent by 2012, and could double by 2026. This would be an undue hardship for our economy, industry and fixed income residential customers.

As further debate takes place, we continue to recommend:

• • That the emissions formula be fixed to provide allowances only to entities that directly serve consumers with power from carbon emitting resources.

• • That utilities receive up to 100 percent of the allowances needed to comply with the mandate in order to minimize the rate impact of the cap and trade program. Allowance prices should have a “safety valve” to mitigate price spikes.

• • That the unrealistic emissions reduction mandate of 17 percent below 2005 levels by 2020 be amended to a reasonable and achievable level. Such a revision is necessary to provide breathing room for utilities to invest in carbon reduction technology without dramatically increasing our Indiana electric rates, hopefully preventing the further loss of business and industry.

• • That Congress fund research and development into carbon reduction technologies in order to meet the carbon cap mandates. We are not opposed to climate change legislation; we simply seek to protect our members and their consumers, the ratepayers of Indiana. The current ACES Act does not safeguard against unfair price increases to Indiana consumers. We encourage you to engage your congressmen on this issue.

We will continue spreading the message of this bill’s negative effect on Indiana and keep doing our part to protect Indiana’s electric rates. We urge consumers to contact Senators Richard Lugar and Evan Bayh and voice their support for a fair, balanced and affordable approach to climate change legislation.

Learn more about the issue at www.fairpowernow.org.

Click here to download the press release.

Even with the changes made, Indiana utilities continue to be “shorted” by more than 35% in the number of allowances that we need from the beginning of the allocation process in 2012. While some positive steps were made with the bill, too many of these allowances are still being given away to special interest groups, such as merchant generating plants that do not directly serve any customers, and entities with non-carbon resources. Coastal states like Washington, Oregon, California and New York rely on low and no-carbon generation resources such as hydro-electric, nuclear and various renewables. Entities in those regions will still be getting allowances even though they don’t emit as much carbon. In Indiana, where we rely on coal to generate electricity, our utilities will not get enough allowances to cover their emissions and will have to go out and buy them at an additional cost to ratepayers. Basically, ratepayers on the East and West coasts will be impacted less by this legislation and will be subsidized by the Midwest!

As the bill stands now, approximately 5% of the allowances are allocated to merchant plants (special interest groups) and another 15% to utilities on the East and West coasts that are served by nuclear or hydroelectricity. Other allowances are directed to research and development. In the process, Indiana utilities will get less than 65% of the total allowances needed to help our consumers. This will require Indiana utilities to purchase more than 35% of the allowances we need right from the beginning - at ratepayers’ expense! In 2025, when these allowance allocations decline dramatically, the end result could be a doubling of our rates.

As the Senate takes up the climate change issue, we continue to recommend:

• - That the emissions formula be fixed to provide allowances only to load serving entities that receive power from carbon emitting resources.
• - That utilities receive up to 100 percent of the allowances needed to comply with the mandate in order to minimize the rate impact of the cap and trade program.
• - That the unrealistic emissions reduction mandate of 17 percent below 2005 levels by 2020 be amended to a reasonable and achievable level.
• - That Congress fund research and development into carbon reduction technologies in order to meet the carbon cap mandates.

Our voices are being heard, but we need to continue working together in pursuit of additional changes in the U.S. Senate if we are to keep energy affordable in Indiana. Consumers served by the members of the Indiana Partnership for Fair & Affordable Energy must continue their efforts to contact our two U.S. Senators, Richard Lugar and Evan Bayh, and express the need to keep Indiana’s electric rates AFFORDABLE!

Progress was made in the renewable energy sections of the bill by including landfill gas as a renewable energy. Adjustments in the Renewable Electricity Standards section also addressed the concerns expressed by some of the smaller utilities. Another major improvement for Indiana consumers was made when the bill changed from a full auction of the carbon emission allowances to a partial auction with some free allocations to emitting entities.

But there is still bad news and areas that must be addressed to keep electricity costs in Indiana fair, balanced and affordable. Changes made by the committee to the emission allowance formula will unfairly punish consumers in Indiana compared to other parts of the country. Utilities on the East and West coasts that are not heavily reliant on coal for their electricity will not have to pay as much for their allowances as Midwestern utilities, and therefore those consumers will see far less impact than we will. The new, unfair formula would grant only between 60 to 70 percent of the allowances Indiana utilities need to help their consumers. The emission allowance formula must call for a fair and equitable distribution of allowances for all emitting utilities or go directly to their customers who will ultimately be paying the costs. Consumers served by members of the Indiana Partnership for Fair & Affordable Energy must continue their efforts to contact members of Congress and express the need to keep Indiana’s electric rates AFFORDABLE!

Indiana is among the hardest hit states in the country under H.R. 2454. Our voices have helped improve the legislation for Indiana, but we have a long way to go. Ask Congress to keep our energy affordable. The time to get involved is NOW: House leadership intends to have this bill passed by the end of June!

A group of Indiana utilities echo that sentiment and add that certainty is also needed in order to effectively plan for the future. The Partnership for Fair & Affordable Energy will hold a press conference Friday, June 5 to address the recent movement of climate change legislation and discuss the group’s work to keep energy affordable for Indiana consumers.

“We believe that something will be done on the climate change issue, either by Congress or the Environmental Protection Agency,” said Bruce Graham, chief executive officer of the Indiana Statewide Association of Rural Electric Cooperatives. “Our goal is to work with the public, Congress and other policymakers to craft a solution that is both environmentally effective - and cost effective, while ensuring safe and reliable power for everyone.”

The non-profit, consumer owned utilities in Indiana formed the Partnership for Fair & Affordable Energy to achieve that goal. Partners include the 39 electric cooperatives in Indiana, Hoosier Energy Rural Electric Cooperative, Wabash Valley Power Association, Indiana Statewide Association of Rural Electric Cooperatives, the Indiana Municipal Power Agency and its 52 member municipalities.

The House Energy and Commerce Committee approved H.R. 2454, “The American Clean Energy and Security Act,” on May 21 after four days of mark-up. “There was considerable improvement to the bill from its original draft. Indiana’s municipal utilities and electric cooperatives want to thank our political leaders for their work to address a number of issues that would have been costly for consumers,” said Raj Rao, president of the Indiana Municipal Power Agency.

Click here to download the press release.

Congress is currently considering legislation designed to reduce greenhouse gas emissions that could increase Indiana consumers’ electric bills by more than $50 a month. The proposal will particularly impact states that rely on coal‐fired generation, especially Indiana where 94 percent of electricity comes from coal.

The Indiana Partnership for Fair & Affordable Energy supports responsible carbon legislation and public policy that achieves carbon reductions at an affordable cost for consumers and with minimal economic impact. To educate consumers about the proposed legislation and its impact, the Partnership recently launched a statewide television advertising campaign and website at www.FairPowerNow.org.

Hoosiers can support fair carbon legislation that balances environment goals with consumer affordability by signing a petition, contacting elected officials, and sharing the message with friends and family.

Click here to download the complete press release.