Published on September 29th, 2009 | by Joe Walsh1
Utilities Divided as Exelon Quits Chamber Over Climate Change
Exelon became the latest utility to leave the US Chamber of Commerce over the business group’s opposition to House climate change legislation. California’s Pacific Gas and Electric announced its decision to leave the Chamber in the climate change/cap-and-trade flap last week, quickly followed by New Mexico’s PNM Resources.
The House Waxman-Markey bill has drawn criticism for being too friendly to utility companies, who would be handed a large percentage of the carbon credit allowances created. That criticism has come not only from environmental advocates who are concerned that free allowances will undermine the value of a cap, but also from other business interests who see the credits creating a potential windfall for utilities – especially those who already generate much of their power from cleaner fuels.
The Chamber’s opposition to Waxman-Markey is understandable when you consider that they represent a broad cross-section of business sectors, including many that did not fare as well in the negotiations as Waxman-Markey took shape. For their part, the Chamber has responded to the recent defections by noting that it only opposes the House bill itself, and is not opposed to the idea of climate-change legislation. According to their COO David Chavern, “Congress should do everything it can to promote and incentivize technology development and other policies that allow us to control carbon in ways that don’t trash the economy.” The fact that the Chamber’s site was unavailable on the morning of Exelon’s announcement indicates that the public may not be ready for so nuanced a position.
Might the departures be a harbinger of movement away from the Chamber across the entire utility sector? Or, should they be viewed as evidence of a fracture within the industry? Utilities that rely more heavily on coal and other dirty fuels share the Chamber’s concerns about cap-and-trade’s impact on the cost of their power. By contrast, PG&E, PNM, Exelon and others that are already invested heavily in cleaner fuels can afford to appear green. It may even be profitable.
The Chamber is in the news right now, but the place to watch as the Senate picks up debate of its own bill will be the utility trade group, Edison Electric Institute, which represents the investor-owned companies on both signs of the fuel type divide. EEI has already been engaging Senate leaders in a way that tries to split the difference for its membership: they are not running from Waxman-Markey, but they have some suggestions for improvement on the Senate side.
This dust-up may be all the more costly for utilities, their trade group and the Chamber if long-term discord is fomented for naught. The Senate will need 60 votes to get a bill. It will be tough to get there as Democrats hailing from industrial and agricultural states have the 1993 BTU Tax debacle in their memories and a 2010 election year in their sights. And, with political fallout that could be even more dramatic than the squabbles that are now unfolding in the business community, there may not be a Senate climate bill in 2009. Either way, the utility industry will be left to mend fences. The questions now are whose fences, and how many?