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Learn More about Proposed Climate Change Legislation

What is Climate Change Legislation?

Proposed climate change legislation is often referred to as a CO₂ tax or cap-and-trade. The legislation is an attempt by the Obama Administration and U.S. Congress to limit emissions such as carbon dioxide (CO₂) through a cap-and-trade program. The version passed by the U.S. House June 26, 2009 was entitled “The American Clean Energy and Security Act, and is referred to as “Waxman-Markey.” Currently Senators Kerry, Graham and Lieberman are working on a draft bill that may be considered by the U.S. Senate in 2010.

Most of the power that serves you and customers across the Midwest region is fueled by coal. As your utility company for more than125 years, Black Hills has invested in this abundant, reliable domestic energy source so that we can deliver reasonably-priced energy to serve our customers.

Black Hills also focuses on the environment. Our power plants that use coal as a fuel source are among the cleanest facilities in the country – we have implemented state-of-the-art technology to reduce our emissions and to conserve vital water resources. In addition, without state or federal mandates, we have integrated wind and solar power into our resource portfolio that serves our more than 750,000 utility customers in seven Midwestern states.

However, some believe Washington should impose additional costs, essentially a tax, on the use of natural gas and coal for electricity. Since utilities in this area and the rest of the Midwest use a significant amount of coal to make electricity, Midwest customers will pay a lot more than other regions if this new “tax” or legislation is approved. Black Hills and others are sharing information in an effort to raise awareness of the pending legislation and its potential costs that Midwestern customers would have to pay.

Understanding Climate Change Legislation: Key Terms

• Allowances: Utilities and/or other businesses and groups are issued emission permits by the U.S. Treasury. The must have allowances for the right to emit CO₂, up to a specific amount proposed in the bill.
  
• Cap: The legislation will set a limit (or cap) on the amount of CO₂ that can be emitted while producing energy. In Waxman-Markey, the number of allowances that will be provided up-front declines between 2012 and 2030 so that energy companies are incented to invest in changes that reduce emissions.
  
• Trade: Companies that need to emit more CO₂ than the allocation provided must buy credits from those that do not need all of their emission allowances because they emit less CO₂. This transfer/purchase and selling of allowances is called a trade.

Good Intentions: To address global climate change concerns while creating “green” jobs and achieving greater energy independence.

Harsh Realities: If Congress passes climate change legislation in its current form, it will increase our customers’ electricity and natural gas utility bills significantly and may destroy more jobs than it creates, especially in the Midwest.

• Significant cost to customers: CO₂ compliance costs will add a hefty and unnecessary “tax” on energy, increasing our customers’ natural gas and electric bills.
  
• Lack of available technology: Proposed CO₂ reductions are too aggressive to be practical or attainable with the current available technology. The implementation timeframe should not get ahead of technology; otherwise there’s no benefit – only tremendous cost. There is no technology available today that can readily replace coal and natural gas generation and be deployed commercially in less than 10 to 20 years.
  
• Allowance distribution unfair: In Waxman-Markey, CO₂ allowances for local electric distribution companies are based 50% on electricity sales and 50% on emissions, shorting our customers by almost half. Allowances need to be based on emissions, not sales.
  
• Redistribution of wealth: Creates windfall profits as high as $1 billion per year for utilities that are less coal-reliant. As written, climate change legislation would increase energy costs for customers in the Midwest for the benefit of the East and West Coasts, and transfer jobs from the United States to countries that don’t limit their greenhouse gases.
  
• No cost containment: A maximum and minimum cost range for emissions credits should be established to avoid market speculation.
  
• Little impact on global green house gas emissions: A federal greenhouse gas emissions reduction program will only be effective if it is part of an international effort that includes all major emitting sectors in both developed and developing countries. Otherwise, we’re just exporting jobs and emissions.

Regulators, Consumer Advocates & Energy Interests On CO₂ Tax

The South Dakota Pubic Utilities Commission (PUC) issued a report examining the cost of climate change legislation proposals and the CO₂ tax. The PUC, which oversees electric and other utilities in the state of South Dakota, concluded that proposals would increase the monthly bills of utility customers, including families, businesses, schools and industry.

The National Association of Regulatory Utility Commissioners (NARUC) is a non-partisan organization representing utility regulators, such as the South Dakota Public Utilities Commission and the Wyoming Public Service Commission. In March of 2007, the organization passed a resolution calling for consumer protection to reduce economic hardship for electric customers that cap-and-trade legislation would cause.

An organization representing utility users, the National Association of State Utility Consumer Advocates, adopted a resolution urging Washington to adopt measures to minimize the cost of a climate change system. The consumer group recognized coal as a critical part of domestic energy supply and the need to reduce potential increases in energy costs through investment in clean coal technologies.

The U.S. Chamber of Commerce represents businesses - large and small. The proposed CO₂ tax would cause the costs for these employers to skyrocket. For a glossary of terms and to read more click here.

LEARN MORE ABOUT WHAT BLACK HILLS IS DOING TO MINIMIZE OUR ENVIRONMENTAL IMPACT :

Watch a video showing how our power plants operate and conserve resources

• Power Plant Video
  
• Coal Mine Video
  

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