CES as Cap & Trade Light

RES, RPS and now CES are being discussed in Congress and various states.

The White Paper on a Clean Energy Standard, published earlier this year by the Senate Committee on Energy and Natural Resources, makes it clear that there is some support in the Senate for a cap & trade mandate – albeit, only a light version.

The Clean Energy Standard (CES) is essentially the same as a Renewable Portfolio Standard (RPS) or a Renewable Energy Standard (RES), except it would cover all 50 states. Some 26 states already have an RPS or RES in various configurations.

RPS, RES and CES all require utilities to generate or procure a minimum percentage of their electricity from renewable sources, primarily wind and solar, which are more expensive than traditional sources of electricity.

This results in families having to spend more on electricity – conceivably much more. A recent EIA study of increased costs by state showed that electricity costs for families could be as much as 60% higher.

Interestingly, the white paper asks whether some states should be exempt from the CES requirement. This raises a fairness issue in addition to all the other issues.

The white paper asked whether there should be credits, ala cap & trade, and if so, how should they be apportioned?

The Senate Committee issued the white paper and requested public comments, with the chairman, Bingham (D), Arizona, and ranking member Murkowski (R), Alaska, jointly issuing the white paper. So this is not a Democrat vs. Republican issue – there are a number of Republicans and many Democrats who claim there is a need for CES or a carbon tax.

The Committee listed six questions for which it was seeking comments.

None of the questions asked whether a CES was needed. This would have been the most important question, but what the Committee was seeking were comments on HOW TO implement a CES, NOT whether it was needed.

Here are the six questions:

  • What should be the threshold [size of the utility] for inclusion in the new program?
  • What resources should qualify as “clean energy”?
  • How should the crediting system and timetables be designed?
  • How will a CES affect the deployment of specific technologies?
  • How should Alternative Compliance Payments, regional costs and consumer protection be addressed?
  • Are there policies that should be considered to complement a CES?

There were sub-questions, but the Committee made it difficult to comment on the sub questions with the admonition that not adhering to the required format would disqualify submissions.

Here’s an interesting sub question posed in the white paper:

  • Should partial credits be given for certain technologies, like efficient natural gas and clean coal? If partial credits are used, on what basis should the percentage of credit be awarded?

Credits, and accounting for them, interjects the same type of bureaucracy that was proposed in the Waxman-Markey, American Clean Energy and Security Act of 2009 – cap & trade legislation that passed in the House, but was rejected by the Senate.

The white paper admits that CES would result in families paying more for their electricity, saying:

  • The RES contained in S. 1462 last Congress included cost containment mechanisms such as limiting the electric rate impact … to not more than four percent per retail customer annually.

It would appear as though there is some support for CES (“cap & trade light”) in the Senate, so that the final decision on whether families will pay higher prices for their electricity may rest with the House.


The white paper is available at http://energy.senate.gov/public/_files/CESWhitePaper.pdf

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