Electric Power Convention: Utility Leaders Endorse American Power Act, Urge Industry Action

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The American Power Act, introduced last week by Sens. John Kerry (D-Mass.) and Joseph Lieberman (I-Conn.), has a very slim chance of passage, but those odds would improve if the industry mobilized its troops and lobbied Capitol Hill for the bill's passage, electricity company executives told about 1,000 attendees at the 12th Annual ELECTRIC POWER Conference & Exhibition here on Tuesday.

"In Washington, difficult or complex legislation often is declared dead -- right before it is passed," James Connaughton, Executive Vice President for Corporate Affairs at Constellation Energy Group Incorporated (NYSE:CEG) (Baltimore, Maryland), corporate parent of Baltimore Gas and Electric Company. He said he saw this happen several times while serving as chairman of President George W. Bush's Council on Environmental Quality.

He noted that the U.S. Congress has a full legislative calendar and several weeks of summer recesses coming up. But the electricity business should not assume that comprehensive energy and climate change legislation is dead for this year: "The odds start to change if data comes in and committee chairman decide to move the bill." He asked industry members to resume their advocacy efforts to get the bill to the legislative finish line.

Connaughton reminded attendees of the consequence of failing to pass comprehensive energy and climate legislation: the threat of EPA regulation of carbon dioxide emissions. "My rule of thumb for EPA command-and-control regulation is that it tends to achieve about one-quarter of the goal, at about four times the cost."

Connaughton's preference for Congressional action on climate change instead of EPA regulation was echoed by fellow panelist Keith Trent, group executive and president of Commercial Business for Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina).

"We are strong proponents of the American Power Act," Connaughton said at the Power Industry Executive Roundtable session that opened the convention. "Yes, it is 996 pages long, but it is a major step forward" compared to the Waxman-Markey bill passed narrowly by the House of Representatives last summer. "The industry has worked long and hard to remedy the problems" created by Waxman-Markey, chiefly the way that it set up a cap & trade system to lower carbon dioxide emissions by industrial facilities, he said.

The American Power Act takes a different approach to lowering carbon dioxide emissions compared to Waxman-Markey, noted the Constellation Energy executive. Rather than distributing CO2 emissions allowances for free to industry, which could create the potential for mischief as those allowances are bought and sold in the secondary market, the APA requires electric generators to buy allowances, and requires distribution companies to rebate allowances back to the generators.

"There will be price increases and price decreases that will, to some degree, offset each other," Connaughton said. "The Senate bill overcomes some of the problems contained in prior proposals. The APA creates an authentic cap & trade system, not a cap & tax system -- and I say this as a free-market conservative," he said.

One of the ironies of the current state of energy legislation is that the electricity industry has come to lawmakers with a consensus proposal on regulating and reducing carbon dioxide emissions -- and the legislation is adrift, with prospects that grow dimmer each day. "When policymakers have an industry that comes together and asks to be regulated, and proposes specific timelines and standards for that regulation, and that regulation fully meet your needs, they're supposed to say, 'Yes,' the Constellation Energy executive said to scattered laughter.

"If we get energy and climate change bill right, there's a good chance that Congress will not revisit these issues for a few decades," Connaughton said. He noted that Congress passed the Clean Air Act in 1970, made significant amendments to it in 1990, and has done nothing significant on it for two decades.

The ELECTRIC POWER show has about 500 exhibitors and 5,000 attendees, estimated Sean Guerre, senior vice president of Trade Fair Group, which hosts the event. This year, for the first time, Trade Fair Group videotaped the executive roundtable, and is offering complimentary access to it at its website.

"We understand that travel restrictions prevented some companies from sending delegates, and people have asked us to webcast the executive roundtable, so we did it," Guerre told Industrial Info in an interview. He estimated that several hundred non-attendees watched the webcast live on Tuesday. Anyone wishing to view the archived webcast can access it at www.electricpowerexpo.com, the website for ELECTRIC POWER.

Click on the audio player to hear Trade Fair Group's Sean Guerre discuss some of the innovations in this year's ELECTRIC POWER show, including how non-attendees can access an archived webcast of the industry roundtable on a complimentary basis.

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