Apr 16 - McClatchy-Tribune Regional News - Rod Rose The Lebanon Reporter, Ind.

Indiana consumers should not suffer because their electric power comes from coal.

That stance was successfully argued by the Indiana Municipal Power Agency Monday, when the Lebanon City Council OKed a resolution opposing carbon cap and trade emission auctions.

Nearly identical resolutions have been signed by the Lebanon Utility Service Board and the Greater Lebanon Community Vision Committee.

The resolution urges persons to contact Sens. Richard Lugar and Evan Bayh, and Rep. Steve Buyer, to oppose climate change legislation "that increases the cost of electricity to Hoosiers."

Congress is debating the American Clean Energy and Security Act of 2009. The bill would limit the amount of "greenhouse gas" emissions, requiring the levels be cut more than 80 percent by mid-century.

Sponsored by Rep. Henry Waxman, D-Calif., and Rep. Ed Markey, D-Mass., the act has four sections promoting: Production of "clean" energy, boosting development of carbon capture methods, vehicle fuel mileage standards as a way of encouraging biofuel development, and creation of a "smart" electric transmission grid.

But the bill would allow cap-and-trade permits -- essentially, licenses to produce pollution -- to be auctioned. Administration officials believe the auction would raise $650 billion. The money would fund research into alternative fuels and help consumers pay for higher utility bills.

Electric bills here could jump up to 40 percent within two years if the federal cap-and-trade permits are sold at auction, Gayle Mayo, IMPA's executive director, told the council.

"It's nothing but the facts," said Council President Dick Robertson. "It's going to affect all of us."

He rejected the administration's position that money from the cap-and-trade auction would benefit consumers. "It's going to go right back in the government's pocket," Robertson said.

Opponents of cap-and-trade auctions contend buyers could -- and almost certainly would immediately -- pass the cost on to utilities, which would have no choice but to raise rates.

Mayo said IMPA and other groups do not question the connection between climate change and greenhouse gas emissions such as carbon dioxide.

Coal-powered generating plants produce 90 percent of Indiana's electricity, Mayo said. Most eastern states draw power from facilities fueled by oil and natural gas.

In the west, hydro-electric plants predominate, Mayo said. "The Midwest electric rate-payer will subsidize a national tax credit" under a cap-and-trade auction, she said.

There are, she said "many other reasons for the difference in rates."

"One of our (economic) advantages in the Midwest is that we have relatively low electric rates," Mayo said. Hoosiers pay between seven and eight cents per kWh on average, Mayo said. The average price on either coast is about 16 cents per kWh.

Electric rates increased here in January, to 7.94 cents per kilowatt for residential service. A typical homeowner here now pays $86 a month; that would increase about $34 a month if Mayo's prediction is correct.

A "no-cost allocation" (NCA) cap-and-trade system "makes more sense," Mayo told the council.

The NCA method "is more economically efficient," Mayo said, although electric rates will increase under either approach.

She said NCA has been successfully used to reduce sulfur dioxide and nitrogen dioxide emissions.

"Some kind of legislation is going to happen," Mayo said. The electric industry faces two options: Invent a way to successfully capture CO2 emissions from generating plants fueled by coal, oil and natural gas, or switch to alternative sources of electricity.

"We are not challenging the science," Mayo said. "Most scientists now agree that (global warming) is mostly, if not partly, caused by human activity."

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