Mar 06 - The Miami Herald

In a simmering feud among major players in the power industry, eight utility executives, including Lew Hay of FPL Group, have politely but firmly told their own national trade association to fix exaggerations in a study intended to warn Congress about the cost of fighting global warming.

"In the revised analysis, we believe that it will be important to accurately estimate the costs associated with the Lieberman-Warner Climate Security Act," the executives wrote in a Tuesday letter to Thomas R. Kuhn, president of the Edison Electric Institute, which represents the nation's utilities in Washington.

The letter, obtained by The Miami Herald, was sent by the executives of some of the nation's top utilities, including the giant PG&E in California and the huge Southern utility Entergy.

It reflects a division within the institute between the companies that contribute relatively little to global warming, because they rely more on cleaner natural gas or nuclear power, and the companies that rely a great deal on dirty coal power, such as Duke Energy.

The institute's report, prepared by the consulting firm Charles River Associates, predicts huge expenses and dire consequences that would come with the legislative prescriptions aimed at addressing global warming.

The Lieberman-Warner bill is believed by many the most practical proposal before Congress. The bill advocates cap-and-trade initiatives in which utilities would have to reduce greenhouse gas emissions or purchase carbon credits as penalties.

"It appears that EEI has been circulating this material as an effort to scare senators from moving forward with the Lieberman-Warner legislation," Frank O'Donnell of Clean Air Watch wrote The Miami Herald in an e-mail. "In a polite, corporate way, the power execs appear to be wood-shedding EEI CEO Tom Kuhn."

FINE-TUNING

A CRA spokeswoman referred all questions to EEI, which issued a statement through spokesman Jim Owen: "EEI's membership recognizes the paramount importance of addressing climate change.

In terms of analyzing the cost of the Lieberman-Warner bill, EEI and CRA already have begun fine-tuning the original analysis, work that will continue in a collaborative, transparent way.

"The bottom line is that EEI isn't wedded to a single analysis or set of numbers -- we simply want to find the best way to achieve major reductions in carbon emissions while minimizing costs to consumers."

Eventually, the CRA study predicted, proposed legislation before Congress could lead to 80-percent increases in the price of residential electricity.

The report predicted that under Lieberman-Warner, the bill that many think has the most chance of eventual passage, penalties for a ton of carbon will start at more than $60 a ton and climb to $535 a ton by 2050.

On Wednesday, the cost of carbon was $32.66 on the European trading market.

"The CRA analysis includes assumptions that jack up projected costs compared to other studies," O'Donnell wrote The Miami Herald.

That includes studies by FPL Group, the parent of Florida Power & Light. It commissioned a study by the Brattle Group that suggested global warming could be managed in the United States by starting with fees at about $10 a ton.

The FPL study suggested the fees might at first add only $7.50 to $10 to the average Florida customer's monthly bill.

CLEANER POWER

The letter was sent under the letterhead of the Clean Energy Group, which was formed by the cleaner power companies in recognition that global warming is a political issue.

They believe that climate change needs to be addressed and can be done so without huge expense.

The letter to Edison requests that a revised CRA study "reflect the provisions of the recently passed energy bill" and "make realistic assumptions" involving carbon trading and other matters.

The letter was signed by Scott Morris of Avista; Mayo Shattuck of Baltimore-based Constellation Energy; J. Wayne Leonard of Entergy; John Rowe of Exelon, which dominates Illinois and Pennsylvania; Thomas King of the London-based National Grid; Peter Darbee of PG&E; Ralph Izzo of the Public Service Enterprise Group in New Jersey; and FPL's Hay.

O'Donnell, like many environmentalists, does not believe a global warming measure will be signed into law this year. He believes a law will be passed in 2009 or 2010.

-----

To see more of The Miami Herald or to subscribe to the newspaper, go to http://www.herald.com.

Copyright (c) 2008, The Miami Herald

Distributed by McClatchy-Tribune Information Services.