Duke Energy Comments on Proposed Lieberman/Warner Climate Change Legislation October 24, 2007
CHARLOTTE, N.C. -
Duke Energy today issued the following statement regarding climate change legislation proposed by U.S. Sens. Joseph Lieberman and John Warner on Oct. 18, 2007. The legislation will be considered by the Senate Environment and Public Works Committee in a hearing today.
Duke Energy commends Sens. Lieberman and Warner and their staffs for their hard work on their legislation to address climate change. The legislation includes some fundamental provisions necessary to effectively reduce greenhouse gas emissions. These include a market-based cap and trade program, allowances for carbon capture and storage, and domestic offsets.
However, we do not believe this legislation adequately protects the economies of the 25 states that produce more than 50 percent of their electricity from coal. The Lieberman/Warner legislation would require utilities to purchase 60 percent of their allowances on the open market beginning in 2012. This would force consumers in coal-dependent states to bear the cost of buying allowances for existing plants, and also the cost of retrofitting or replacing their plants as new technology becomes available.
This would result in an unacceptable “double hit” for consumers living in the 25 states that receive the majority of their electricity from coal.
A better and equally effective approach would be to allocate a larger percentage of the allowances to utilities based on their historic emissions levels, and periodically reduce the allocations over time. This approach was successfully used to reduce sulfur dioxide emissions levels in the 1990 Clean Air Act Amendments. This legislation has substantially reduced sulfur dioxide emissions with little economic harm.
The legislation also does not adequately address allowance price spikes and volatility. Electricity is a basic necessity of our economy, and consumers cannot simply choose to do without when prices get too high. Thirty-two energy companies from across the nation support an escalating “safety valve” that would kick in if allowance prices were to rise to a level that would clearly damage our economy. Allowance price volatility would only benefit Wall Street traders, and do so at the expense of Main Street consumers.
In addition, electric utilities invest for the long term – with major power plants often costing billions of dollars and lasting 30 to 50 years. A safety valve provides the price certainty we need to make these long-term investments on behalf of our customers.
We look forward to working with Sens. Lieberman and Warner, and others on the Senate Environment and Public Works Committee, to develop effective and economically sustainable climate change legislation in the weeks and months ahead.
Duke Energy, one of the largest electric power companies in the United States, supplies and delivers energy to approximately 4 million U.S. customers. The company has nearly 37,000 megawatts of electric generating capacity in the Midwest and the Carolinas, and natural gas distribution services in Ohio and Kentucky. In addition, Duke Energy has more than 4,000 megawatts of electric generation in Latin America, and is a joint-venture partner in a U.S. real estate company. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.