What Will You Pay With Cap and Trade

Cap and Trade

Adopting new measures like cap and trade, as well as requirements to generate a certain percentage of renewable energy, generally sounds good to most people.  Until it hits their pocketbooks.  Yep, now that proposed new laws really ratchet down on greenhouse gas emissions, some consumers are realizing that their utility bills are about to jump faster – and higher -  than a grasshopper in June.

The headline in my local paper yesterday?  “Anti-pollution efforts in D.C. may cost extra for Oregon power users.”  Some may say, “so what?  That’s the price of playing with coal.”  But in the current economy, my bet is that we’ll see some unhappy taxpayers, as well.

For a primer on what “cap and trade” is, this is a pretty good overview:

Here in Central Oregon, I am about to suffer pretty high utility bills (unless I switch to 100% solar or wind).  Pacific Power is expecting to raise its rates nearly 18% for its customers in Oregon.  Says its the CEO of its holding company, MidAmerican Energy Holdings Co.:

“The bill’s trading mechanism will impose a huge and unacceptable double cost on our customers.”

What will Cap and Trade cost (now and in the future?)

So, exactly what will renewable energy legislation cost?  What will you pay with cap and trade?  Like the well-trained lawyer that I am, I’ll give you the $200 answer, right here:  “It Depends.”

Across the United States, the amount of energy that is used, state-by-state, varies, as does the source of the electricity.  In Oregon, for example, my electric utility company relies on coal for 56% of its total energy portfolio.   So, we’re going to feel the pinch more than people living in an area with relatively lower coal-based electricity (those with hydroelectric, solar and/or wind in the mix).  For example, while Oregon is looking at an 18% increase, Washington is only at 12 1/2%.  But I’m glad I don’t live in Wyoming where rate increases are estimated at nearly 22%!

What exactly is going on with cap and trade that results in these numbers?

Utilities are assuming a cost of $25 for every ton of CO2 emitted in 2012, when the climate change bill would become effective.  And we all know to whom that cost is passed on!  On the other hand, experts and commentators believe that the industry projections of the cost to meet the new regulations are simply too high.

While we wait for the bill to pass and the dust to settle, I’m curious:  what do you think of the projected rate hikes:

1.  Finally – we need to make dirty coal use pay for itself!

2.  I’m not happy about the increased cost of my electricity, but we all should do something about climate change.

3.  It doesn’t bother me, because I rely on renewables anyway!

4.  Well, this convinces me to finally install solar panels or wind turbines at my home/small business.