Utilities:

Exelon's Howes discusses Waxman-Markey bill, role of nuclear in U.S. energy policy

How does the nation's largest electric and gas utility view the climate and energy legislation that is making its way through the House? During today's OnPoint, Helen Howes, vice president of environment, health and safety at Exelon, gives her company's take on the Waxman-Markey climate and energy bill and the effect it will have on utilities. Howes also assesses the Obama administration's approach to handling nuclear power as part of the energy policy puzzle.

Transcript

Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Helen Howes, vice president of Environment Health and Safety at Exelon. Helen, it's great to have you on the show.

Helen Howes: Thank you for having us here.

Monica Trauzzi: Helen, things are moving quickly in the House on a climate and energy package.

Helen Howes: Absolutely.

Monica Trauzzi: What is Exelon's take on the Waxman-Markey draft as it stands now, the targets it establishes and how it treats utilities?

Helen Howes: I am amazed at how quickly things are moving. We are very optimistic that the bill will come out of committee. We like the targets and timetables. I suspect there might be a little reduction in some of the earlier reductions that are being proposed. We think it's important for a piece of legislation to move forward. I think utilities will be treated reasonably well. We represent something like 40 percent of the greenhouse gas emissions in the U.S. Clearly, we're interested in some allocation of allowances. The numbers we're hearing sound reasonably fair.

Monica Trauzzi: So, how does this compare to what the U.S. Climate Action Partnership proposed and do these targets meet sort of what you were thinking back then?

Helen Howes: I think it's definitely in the range. The 2020 number might be a little lower than the U.S. Climate Action Partnership, I tripped over that one, but I think generally speaking the targets and the timetables are very close, well within range.

Monica Trauzzi: You mentioned the allocation of allowances and this is obviously something that's up for debate, heated debate ...

Helen Howes: Absolutely.

Monica Trauzzi: ... who should handle keeping consumer prices down. So really, should it be the utilities who are given that responsibility or should the government be handling that in some way through tax credits?

Helen Howes: I think it's going to be a combination of factors. Our preference is that the allowances be allocated to the distribution utilities, so the local company from whom people buy their electricity. Our view is they're closest to the consumers. Consumers will definitely be paying a higher price of electricity with a carbon price included in the price. What we think the attractiveness of the distribution to the distribution companies or allocation of allowances to the distribution companies is there already is a regulatory framework, the public utility commissions. And they can ensure that the dollars that are made from the sale of the allowances can then come back to customers either through rebates, potentially low income programs, additional energy efficiency, something that will help customers manage what is likely to be higher electricity prices.

Monica Trauzzi: Both the House and Senate have seemingly lowered their original targets for a renewable electricity standard and Exelon CEO John Rowe has talked about sort of a five-tier approach to handling energy policy. Does the RES help reach those goals that he has laid out and established?

Helen Howes: I think our focus on Waxman-Markey was clearly on the title dealing with climate change. On the renewable side of things I think the view of the company is the initial target was a little high anyway. I think we're comfortable with more of a 15 percent. We recognize renewables has to be part of a low-carbon future. It's got to be part of the generation mix, so we're supportive of renewable energy standards.

Monica Trauzzi: You're also very supportive of nuclear energy. It plays ...

Helen Howes: What a surprise!

Monica Trauzzi: ... a big role in your business strategy.

Helen Howes: Absolutely.

Monica Trauzzi: Your company is the largest nuclear power producer ...

Helen Howes: That's correct.

Monica Trauzzi: ... in the U.S. What's your take on how the administration and the Democratic leadership have spoken about and handled nuclear so far?

Helen Howes: I think there is an acknowledgment clearly that nuclear has to be part of the solution going forward. It's a low-carbon generation source. Twenty percent of the electricity in the U.S. currently is produced from nuclear power. It has to be part of the options. I think the challenges going forward will be how do deal with some of those more difficult issues like Yucca Mountain and dealing with ways going forward. But from all evidence that we've seen, there's an acknowledgment by the administration that nuclear has to be part of the equation going forward.

Monica Trauzzi: So, what needs to happen legislatively then, I mean because we're sort of hearing two separate things, nuclear needs to play a role, but at the same time Yucca is being shot down.

Helen Howes: Right, it means we'll look for other options. We'll look for other options for the long-term storage of used fuel. Yucca Mountain was, from our perspective, a pretty attractive option. Clearly, customers have paid towards the establishment of Yucca Mountain, but if there is no Yucca Mountain, we will look for another option and we will work with DOE and others to find another option.

Monica Trauzzi: Exelon has taken some big steps in reducing its own emissions ...

Helen Howes: Absolutely.

Monica Trauzzi: ... and improving energy efficiency. What are your short-term and long-term plans on those two fronts and as you develop these ideas and these business practices, are you keeping certain targets in mind for a cap and trade?

Helen Howes: Absolutely, but we established a goal under the Climate Leaders Program in May of 2005. And at that time our goal was an 8 percent reduction from a 2001 baseline. So that was roughly 1.3 million metric tons and we thought that was a pretty aggressive goal and the EPA also agreed it was a pretty aggressive goal. We achieved more than a 35 percent reduction in our own greenhouse gases by the end of 2008. So that's equivalent of 6 million metric tons. So we certainly exceeded that goal and are very proud of ourselves in doing so. Additionally though we launched, last year, Exelon 2020, which is our roadmap to a low-carbon future and it's a combination of reducing our own emissions, working with our customers to help them reduce their emissions and also ensuring that there is low-carbon generation into the markets that we operate in. So the low-carbon generation would be everything from additional renewables to nuclear upgrades.

Monica Trauzzi: Final question here, is enough being done in the U.S. on the conservation and energy efficiency fronts? There's been talk about creating this national energy efficiency standard.

Helen Howes: Sure.

Monica Trauzzi: Is that the way to go?

Helen Howes: It could be. Right now the two states that we operate in, Pennsylvania and Illinois, we do have energy efficiency standards. Our utilities are delivering customer based energy efficiency or customer focused energy efficiency programs. I think that will go a long way. And the federal standard, there's lots of details to work out, but clearly there are some states that could benefit from an additional push in the energy efficiency area. We're already working on it very hard.

Monica Trauzzi: OK, we'll end it right there. Thank you for coming on the show.

Helen Howes: Thank you.

Monica Trauzzi: And thanks for watching. We will see you back here tomorrow.

[End of Audio]

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