The matter of carbon allowances for the power industry appears to be a tough problem. The Edison Electric Institute's split-the-baby solution, which congressman mostly accepted in the Waxman-Markey cllimate change bill, has come under enormous challenge from coal-intensive utilities and their US senators.
EEI's compromise solution, giving coal-heavy companies not enough to cover all their emissions while giving non-emitting utilities a goodly share, is unfair, the coal utilities say. And with 14 senators vowing to support their position, the EEI allocation formula looks to be on the skids.
But Exelon's John Rowe doesn't think so.
Speaking to state utility regulators at their annual meeting in Chicago this week, Rowe was asked whether he thinks the EEI so-called 50-50 allowance allocation can survive.
Of course, Exelon doesn't have much in the way of emissions, and so it is one of the companies that want some allowances not associated with carbon emissions. But still, Rowe is in touch with a lot of people, and he's been around a long time. His take: Tom Kuhn at EEI is "doing a pretty good job keeping the utilities together. They are closer to united than is normally the case." Rowe had nothing to say against his CEO brethren; the costs at stake are very large, he observed.
And he suggested that "there might be some difference between what utilities are saying in EEI meetings and what they're saying in the halls of Congress."
If what Congress ends up with in the spring is cap-and-trade legislation, which Rowe strongly believes it should, his prognostication is that if a cost collar is "tightened so the costs in the early years are fairly predictable, I think most of the industry can be brought together to support a bill ... but only ... between midnight and 3 o'clock, when it's this or face EPA" regulation.
Whether that's wishful thinking is unknown at this point, as the Senate seems to have thrown the door open to alternatives that don't look like the Waxman-Markey or Kerry-Boxer bills. But Rowe's middle-of-the-night scenario sure has a lot of basis in history.
Asked in Chicago about his stand on a carbon tax instead of cap-and-trade, Rowe conceded he would be just as happy with a tax ("but remember I've got an easy ride" with so much no-carbon power). But it wouldn't be as simple as many think, he cautioned. And the biggest "but," he said -- the real reason he is not promoting a tax -- is that whenever he mentions it to someone important in Washington, they tell him, "Little boy, take your great ideas and go home."
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