E-Mail Page  Print  Feedback

Notes on Legislation

Jan. 31, 2008

Letter on Lieberman-Warner Climate Security Act of 2007

The following is the text of a letter from Basin Electric CEO and General Manager sent to the congressional delegates in the service territories of Basin Electric's member systems on S. 2191, America's Security Act of 2007.

I write to express my great concern with the Lieberman-Warner Climate Security Act of 2007. We are all aware of the strong desire to develop a plan to address climate change, a goal which I share.  However, the consequences of mandating rapid and poorly considered carbon dioxide reductions will have dire impacts on not only our rural electric consumers, but to all Americans.  Any climate change legislation must be responsible, avoiding long term economic consequences to our consumers and our economy, and allowing adequate time to develop and deploy carbon capture and sequestration technologies.

Our analysis of the bill, based on a modest price of $15 per ton of carbon dioxide, suggests costs to Basin Electric in the range of $200 to $400 million per year over the first five years.  The system of purchasing these carbon credits is sketchy at best.  Our analysis further indicates an increase of our wholesale rates to our members by 36 to 70 percent. 

Another analysis, provided in the attached testimony given by Dr. Anne Smith, CRA International, to the Senate Environmental and Public Works Committee, indicates wholesale electricity prices would increase by 36 to 65 percent by 2015 under Lieberman/Warner.  This same study states that the real annual spending per American household would be reduced by as much as $1,300.  Most of these costs would be borne by consumers of coal-based generation. This rapid increase in costs will drive utilities to gas based generation.  The already volatile gas market may increase dramatically and homeowners in cold climates, heating their homes with gas, will see a double impact.

To prevent radical increases in electric and gas prices, I believe coal must continue as a major source of electric generation in our country. Coal currently provides 50 percent of America’s electrical energy and 80 percent of this region’s power supply.  After all, it’s abundant and, unlike natural gas or oil, it is supplied domestically.  It serves our members’ energy needs and serves them reliably.

Basin Electric is making efforts to diversify our power supply to include wind, gas and waste heat. Our plans don’t end there.  We plan to build the nation’s first cooperative-owned wind farm, and are pursuing conservation/efficiency programs.  These efforts help limit the amount of carbon released into the air.

We are also working hard to develop carbon capture and sequestration technologies for coal.  We have been a leader in carbon dioxide sequestration and are currently planning to test pioneering carbon capture technologies at our Antelope Valley Station.  That being said, these efforts will take time and a huge financial commitment. 

The Lieberman/Warner legislation does not allow the time or commit the resources necessary to protect our consumers.  The bill has yet to undergo extensive evaluation and much about it is not only unclear, it is confusing.  Clearly, I oppose such legislation and, in my opinion, it is inconceivable that a bill with such dramatic impact could move forward with so little analysis. 

In short, I believe that this bill needs further study.  On the surface, it appears that this bill moves too quickly, imposes too much cost and does not create a path for the continued use of coal.  Industry needs time and federal participation to demonstrate and commercialize carbon capture and sequestration technology.  As you know, we’re working on it; we recognize CO2 regulation is coming, and we’re striving for solutions, but we don’t believe unnecessary and exorbitant costs should be borne on the backs of America’s rural electric consumers.  

I would ask you for your assistance in determining the economic consequences of this bill. 

Sincerely,

Ronald R. Harper
CEO & General Manager

Top of page

E-Mail Page  Print  Feedback

• Notes on Legislation
• Glossary

Dr. Anne Smith analysis

Testimony given by Dr. Anne Smith to the Senate Environmental and Public Works Committee on America's Climate Security Act of 2007, S2191, on Nov. 8, 2007.

Presentation to Rural Electric Statewide Manager's Association  on "Overall economic costs of addressing Climate Change Goals" to the Rural Electric Statewide Managers Association in Houston on Jan. 18, 2008. 

EPRI Presentation 

Electric Technologies in a Carbon-Constrained World presented by Bryan Hannegan, Vice president, Environment, at Rural Electric Statewide Managers Association Meeting in January 2008.