CLIMATE:

Power providers show sharp divides on Senate bill

The head of the Edison Electric Institute said yesterday that his organization has been lobbying senators to pass the stalled cap-and-trade bill.

"We have been doing that," said Tom Kuhn, president and CEO of EEI, at the National Press Club. "We were advocating that they talk to each other."

But the head of another utility group criticized the Senate effort, and the U.S. Energy Association's "State of the Industry" conference Wednesday highlighted the divisions among energy sectors and even within them on the controversial climate legislation.

"We don't find it to be workable legislation," said Joe Nipper, senior vice president for government affairs at the American Public Power Association, which represents 2,000 publicly owned power providers.

Nipper's concern was echoed at length by Jack Gerard, president and CEO of the American Petroleum Institute, who delivered a forceful broadside at the cap-and-trade efforts of congressional Democrats and President Obama. He mocked those who have said it would cost American families the equivalent of a "postage stamp a day" and deemed the bill an attack on home-grown U.S. energy.

"The opponents of domestic energy development are aligning themselves rhetorically with the right goal -- what the public wants -- even as they consistently espouse policies that would put that goal farther and farther out of reach," Gerard said.

But other industry trade association heads said they want to finish the debate and move on.

"I would emphasize the importance of resolving this," said John Shelk, president and CEO of the Electric Power Supply Association, which represents power generators and marketers. "We need to put a price on carbon and provide the tools we need for broader competition."

They are also increasingly worried that U.S. EPA will step in if Congress does not.

"Everyone agrees that legislation is a lot better way to go than plant-by-plant regulation," said EEI's Kuhn.

EEI, which represents investor-owned utilities, drafted a proposal for slicing up emission allocations that was incorporated into the House climate bill last summer by House Energy and Commerce Chairman Henry Waxman (D-Calif.).

The liberal chairman's willingness to accept an industry proposal surprised many. But the plan also caused friction within EEI, threatening the fragile coalition of large utilities that had agreed to the proposal. A band of Midwestern utilities with dominant coal portfolios lashed out at the plan, saying the allocation formula would be too expensive for their customers.

Kuhn said that the conventional wisdom in Washington is that the cap-and-trade bill is dead because of the partisan divide in Congress that has been aggravated by the health care debate, the economy and the difficulty of passing legislation.

"It's not always good to follow conventional wisdom," Kuhn said. "I don't think we should discount the idea that it could pass just because it's an election year."

Kuhn said major energy legislation has passed or come close in previous election years. But he also said that successful energy legislation has usually won bipartisan support, which seems unlikely this year.

"This is the widest political divide I've seen in a long time," Kuhn said.