April 2009 New Analysis
Budget plan would have 'devastating effect' on electric rates
The Obama administration’s budget proposal contains a tax on consumers in the name of climate change that is designed more to fatten government coffers for tax cuts than to address environmental concerns, said Glenn English, CEO of the National Rural Electric Cooperative Association.
In a Feb. 27 letter to President Obama, English said a provision in the president’s fiscal 2010 budget outline to auction carbon emissions credits as part of a massive revenue-raising scheme would have a devastating effect on the affordability of electricity.
While electric co-ops stand ready to work with the president and Congress to develop sensible, low-cost approaches to climate change, English said, the auction system cedes control of the price of electricity to Wall Street financiers and multinational corporations.
The administration wants Congress to enact a program that would raise about $80 billion annually starting in 2012 by auctioning allowances of carbon to the highest bidder.
It contends the market-based approach would reduce greenhouse gas emissions about 14 percent below 2005 levels by 2020, and about 83 percent below 2005 levels by 2050. But only a small portion of the new revenues, expected to reach nearly $646 billion by 2019, will go toward energy investment and research.
The lion’s share will be returned in the form of household tax cuts — meaning the plan would take away money from consumers through higher electric bills and pay it back later in the form of tax cuts. “If the government needs to raise revenue to fund important national priorities, those taxes should be set by the government and collected by the IRS, not set by Wall Street to be collected by utilities,” English said.
Concerned that revenues collected from the auctions would represent a transfer of wealth from parts of the country that rely more heavily on fossil fuel-based generation to other regions, a group of 15 Senate Democrats, led by Evan Bayh, have signed a letter urging that any cap-and-trade legislation “ensure that consumers and workers in all regions of the U.S. are protected from undue hardship.”
The fact that the administration assumes that Congress will enact a cap-and-trade system means outreach by members to elected officials through the “Our Energy, Our Future” program is vital, English said.
“There is no time to waste. It is clear which direction the administration is taking, and it is incumbent on every single co-op to contact their members in Congress and express their very real concerns about this budget proposal.” — Reprinted from EC Today, a trade newspaper published by NRECA
Written By: eceditor
Date Posted: 3/25/2009
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