Controversial Wisc. Climate Bill Assumes Feds Will Tax Carbon

MacIver News Service 

Is Wisconsin’s Global Warming Bill built on a house of cards?

Critics of the so-called “Clean Energy Jobs Act” (CEJA) bill are pointing to a major assumption it makes about future national regulation of carbon emissions that would make or break the bill.

Right now it is cheaper to produce electricity from fossil fuels than from renewable sources.  Supporters of CEJA are counting on that to change.

In calculating the cost-benefits of CEJA, The Wisconsin Public Service Commission “assumed a future cost for emitting carbon dioxide from power plants that starts at $20/ton and rises slowly with inflation,” according to the Office of Energy Independence.  If that happens, the PSC says it will then be cheaper to produce electricity from renewable sources than from fossil fuels.

To capitalize on that possibility, CEJA would enforce Renewable Portfolio Standards (RPS) that set requirements on how much renewable energy utilities would have to sell.  By 2025, a full 25 percent of all electricity sold in Wisconsin would have to come from renewable sources, under the bill.  

If the PSC’s assumption is correct, the Office of Energy Independence predicts “electric utility bills would go down under this legislation.”  However, to date, the federal government has had little luck in passing that  type of carbon regulation, the PSC is counting on.

The federal bill that would establish carbon regulation, often called Cap and Trade, has stalled in the U.S. Senate. Deborah Sliz, President and CEO of  the Washington, D.C. lobbying firm Morgan Meguire, believes with upcoming election cycle, Cap and Trade probably won’t pass anytime within the next couple of years.

Sliz was the keynote speaker at the Customers First! Coalition Power Breakfast in Madison on Wednesday. 

At that same breakfast, Representative Mike Huebsch (R-West Salem) argued it’s dangerous to base state legislation on what might or might not happen in Washington at some unkown date in the future.

“Those are tremendous assumptions and take remarkable leaps of faith, because if Cap and Trade in Washington isn’t dead, it’s certainly on life support,” stated Heubsch during a panel discussion.

Representatives Spencer Black (D-Madison) and Jim Soletski (D-Green Bay), who wrote the Assembly version of the Clean Energy Jobs Act, sat on the panel with Heubsch and defended reying on the assumption.

Representative Soletski argued it is not a great leap of faith to believe Washington will eventually pass some form of carbon regulation, and Wisconsin needs to be ready for it.

“If not now, when?  It’s going to happen,” said Soletski. “We are going to put an emphasis on renewables.  We are going to put an emphasis on efficiency.  Are we going to do this in 2010, or are we going to do this in 2020 or 2030?”

Representative Black argued other states used the same methods as Wisconsin in analyzing potential climate legislation, but Wisconsin has been much more responsible in its assumptions.

“Other states have actually gotten much more robust numbers,” said Black. “Very intentionally, the Public Service Commission put in the most conservative assumptions, so it is completely defensible.”

The panel discussion was not the first instance that the controversy over assuming federal regulation of carbon emissions has been discussed.  Eric Callisto, chairman of the Public Service Committee, addressed it at an assembly public hearing on Tuesday.

“We get about two-thirds of our power from coal,” said Callisto. “That coal is a tremendously reliable source of energy, but its regulatory costs are sure to rise.  And as a state, we’re sitting on a lot of potentially very expensive regulatory liability right now.”

During the panel discussion Wednesday, Representative Huebsch said “I don’t think you can simply state this legislation is going to be economically advantageous unless you can keep with all the assumptions that Chairman Calisto made.”

The Assembly and the Senate are holding public hearings this month on the bill which was developed from the findings of Governor Jim Doyle’s Global Warming Task Force.

During the panel discussion, Representative Black stated “We will pass a clean energy bill.  (But) it will not look like the bill we have now.”

While changes are clearly on the horizon, based on the comments of the past week it appears likely the final bill will still be based on the assumption that Congress will impose expensive regulations on carbon emissions.

The floor period ends on April 22.