poor giant utilites
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Utility Companies 'Just Exhausted' After Defeat on Climate Bill
2010-07-26 04:01:00.10 GMT
By Lisa Lerer and Simon Lomax
July 26 (Bloomberg) -- Every month over the past two years,
Chief Executive Officer Ralph Izzo of the utility Public Service
Enterprise Group Inc. traveled to Washington from Newark, New
Jersey, to meet with more than 50 senators and advocate for
climate-change legislation. His efforts may have been in vain.
Izzo is among the army of lobbyists, CEOs, and advertising
experts deployed by utility companies to push the Senate to pass
a cap-and-trade bill that would create a system for power
companies to buy and sell pollution rights.
Even though the utility industry spent almost $68 million
on lobbying in just the first three months of this year, more
than any other sector except pharmaceuticals, according to data
compiled by the Washington-based Center for Responsive Politics,
their campaign couldn't compete against a recession and divisive
campaign season. Last week, Democrats abandoned their efforts to
pass a measure this summer.
"I don't know what more you can do," Izzo said. "We are
essentially volunteering to be the first to be regulated and
people don't want to do it."
One of the architects of the legislation, Democratic
Senator John Kerry of Massachusetts, said he's still working to
negotiate a cap-and-trade system that the Senate may consider in
a lame-duck session after the November congressional elections.
Utility companies say they doubt the legislation will be
enacted anytime soon. They have little expectation Kerry will be
successful this fall and predicted Republican gains in the
elections would make a climate bill unlikely to pass when the
next Congress reconvenes in January.
Long Odds
"The odds are still very long," said David Brown, senior
Vice President for Federal Government Affairs at the Chicago-
based utility Exelon Corp., who estimates he's held hundreds of
meetings with senators and staff on the issue. "Everybody's
just exhausted."
Utility companies anticipate Congress will eventually pass
legislation that mandates reductions in greenhouse gases and
favors renewable sources of energy, rather than letting the U.S.
Environmental Protection Agency decide how best to regulate.
Still, not knowing when Congress will step in makes
planning investment difficult.
"There's a lot of capital sitting on the sidelines just
waiting for more regulatory clarity," said Lewis Hay, CEO of
Juno-Beach, Florida-Based NextEra Energy Resources LLC.
In the meantime, the utilities will keep pushing for a
bill. A group of companies and environmental groups held a
conference call July 23 to plot future advocacy efforts, Brown
said. Participants included Duke Energy Corp., Dominion
Resources Inc., PNM Resources Inc., NRG Energy Inc., Xcel Energy
Inc., and Exelon.
'Election Forces'
Josh Freed, director of the Clean Energy Program at the
Washington-based research organization Third Way, which favors
cap-and-trade legislation, attributed the industry's defeat to
"powerful election forces."
Democrats don't want to cast another tough vote four months
before the midterm elections, particularly one that appears to
create a big government program, he said. Republicans, some of
whom previously supported a climate bill, are now under party
leaders' pressure to stay unified before the elections.
In addition, members in both parties want to avoid
criticism from the Tea Party movement, which has targeted
lawmakers who backed climate measures.
Electricity Bills
The recession also increased the difficulty of passing the
bill, some utility executives said. John Russell, president and
chief executive officer of Jackson, Michigan-based utility CMS
Energy Corp., said it would be a "stretch" this year for
lawmakers to pass any measure that could increase consumers'
electricity costs. It's better to wait until "the economy has
rebounded," he said.
There is even relief among some utility executives that the
bill won't be taken up this year. Coal-dependent Midwestern
utilities said it could hurt their ability to compete against
companies with larger renewable portfolios and nuclear
investments.
The Standard and Poor's 500 Electric Utilities Index, which
comprises 35 companies including Duke Energy and NRG Energy,
rose 2.5 percent July 22, the day Reid announced the cap-and-
trade plan won't be part of the upcoming energy bill. Utilities
outperformed the S&P 500, which rose 2.3 percent that day.
Companies that sell coal to utilities did better, with
Peabody Energy Corp. rising 5.1 percent and Arch Coal Inc. 7.2
percent.
House Version
Since the House passed a climate bill last summer, Kerry
and other Democratic supporters have held dozens of meetings
with utility companies and lobbyists to discuss a cap-and-trade
proposal that would limit carbon dioxide emissions across the
entire economy.
"Industry has been here over and over again literally
begging the Senate to put a price on carbon," said Senator Mark
Udall, a Colorado Democrat.
They presented their proposal in May, flanked by officials
from the Edison Electric Institute, a Washington-based group
that represents utilities such as American Electric Power Co.,
Southern Co., and the CEOs of Duke, NextEra and PG&E Corp.
That agreement began falling apart after the senators
retooled their proposal to cover only utility companies in an
effort to pick up votes from moderate Democrats and Republicans
hesitant to vote for a broad measure.
The utilities, which had been mostly united on the broad
bill, then fragmented over the new measure, contributing to
making it politically toxic.
The spilt made it difficult for the Edison Electric
Institute to support the legislation, according to a lobbyist
familiar with the negotiations. In meetings with 11 senators and
the White House on July 20, the lobbyist said, EEI said it
wouldn't back the bill before Congress's August recess.
"This was a two-week fire drill and there really wasn't an
opportunity to flush out a detail that would have gotten the
overwhelming support of the industry," Brown said.
For Related News and Information:
Top environment stories: GREEN <GO>
Stories about U.S. and climate: TNI US CLIMATE <GO>
Global emissions data: EMIS <GO>
Northeast U.S. trading: RGGI <GO>
--Editors: Max Berley, Robin Meszoly
To contact the reporters on this story:
Lisa Lerer in Washington at 202-624-1966 or
llerer@bloomberg.net;
Simon Lomax in Washington at +1-202-654-
4305 or slomax@bloomberg.net.
To contact the editor responsible for this story:
Mark Silva at +1-202-654-4315 or msilva@bloomberg.net
