| environmental programs
CAiR is Back But where is it on your utility bill?
By ROBER T UKEiLE Y
Robert Ukeiley (rukeiley
@ igc.org) is a lawyer
who represents environmental nonprofits in
Clean Air Act litigation
affecting energy issues.
in the March issue, I reported that the U.S. Court of
Appeals had struck down the Clean Air Interstate Rule
(CAIR) on the grounds that, under Bush administration
rules, it was too weak to protect public health and welfare.
CAIR is a cap-and-trade regulation covering nitrogen oxide
and sulfur dioxide emissions from power plants and other
pollution sources. CAIR is a significant step in ensuring
that the true cost of dirty energy is reflected in the cost
of electricity, thus leveling the economic playing field for
renewable energy and energy efficiency.
On Dec. 23, the U.S. Court of Appeals gave us a little
relief. It required the Environmental Protection Agency to
leave CAIR in place while developing a new program that
complies with the law. This means many fossil fuel power
plants in the East and Midwest will have to invest in significant clean-ups of their air pollution.
Because many utilities now impose an environmental
surcharge, it often takes a little digging to find the impact
of CAIR on the cost of dirty energy. The cost of the environmental surcharge goes up based on the cost to the
utility of complying with environmental requirements.
Increases to this environmental surcharge are often
subjected to minimal public service commission review.
When a utility talks about its rates, it usually means the
base rate, excluding the environmental surcharge, the fuel
adjustment clause and other costs. In comparing the cost
of customer-owned renewable energy and energy efficiency
to the cost of electricity from utility companies, it is critical that the comparison consider the complete cost of the
utility’s electricity, including the increases in various surcharges that are likely to occur in the future.
For example, if a company is considering the cost-ef-fectiveness of a 20-year power purchase agreement for a
customer-sited solar photovoltaic system, one has to compare the cost of the electricity from the power purchase
agreement versus the cost — including all surcharges — of
the utility electricity.
CAIR also becomes more stringent in 2010 and again in
2015, which will likely impact the environmental surcharges
of fossil fuel-dependent utilities subject to CAIR. To quantify
the cost of these increases of stringency, consumers can turn
to various companies that predict the future price of pollution credits under CAIR and other programs. Only then can
we understand the value of renewable energy solutions. ST
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