Senate set to act on renewable utility plan

WASHINGTON Wed Jun 13, 2007 6:05pm EDT

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WASHINGTON (Reuters) - The fate of a proposal in the Senate to require U.S. utilities to get 15 percent of electricity supply from renewable sources by 2020 could come down to which way the wind blows - literally.

The proposal by New Mexico Democrat Jeff Bingaman has drawn opposition from lawmakers from states that don't have the prevailing wind currents to justify building giant wind turbines, which will be key for utilities to meet the target.

Bingaman, chairman of the Senate Energy Committee, wants to add a "renewable portfolio standard" to pending energy legislation that would require utilities to produce electricity from sources like wind, solar or geothermal, or pay a penalty.

Environmentalists, officials from the wind and solar industries, and lawmakers from windy states in the Great Plains say the bill will spur cleaner power supply and reduce greenhouse gases attributed to global warming.

Lawmakers from states with low wind energy potential - notably the Southeast and Midwest - are up in arms, and say Bingaman's plan could cost state consumers billions of dollars in higher electricity prices.

"You can't impose the same wind requirement on states that have no wind," said Sen. Pete Domenici, New Mexico Republican. Even though his state's utilities could benefit from the plan, he has offered a competing amendment that would allow electricity from nuclear power plants, new hydropower dams and fuel cells to count toward the 20 percent requirement.

The Senate could vote on the measures as early as Thursday.

Domenici's alternative plan would allow states to opt out of the requirement, while Bingaman's plan would allow the Energy Department to waive the requirements if compliance is "beyond the reasonable control of the utility."

Proponents say the bill will cut emissions of heat-trapping greenhouse gases - which scientists say are causing the Earth's temperatures to rise dangerously -- by 400 million metric tons, the equivalent of taking 71 million automobiles off the road.

"It's cheap, it's clean, it's a solution to the climate change issue," said Sen. Jon Tester, Democrat from Montana, which is among over 20 U.S. states that have enacted their own renewable requirements for their incumbent utilities.

Opponents of the bill said 16 mostly Southeast states could see $175 billion in extra costs by 2030, based on a study done by Global Energy Decisions on behalf of the Edison Electric Institute, which lobbies for big U.S. utilities.

"This is a massive wealth transfer" from the states to the federal government, which would collect fees from utilities and spend them on clean-energy research, said Sen. George Voinovich, Ohio Republican.

The federal Energy Information Administration said costs for electricity and natural gas will be $18 billion higher than normal. Spending on electricity would rise by less than 1 percent if the plan is enacted, the EIA said.

Atlanta-based Southern Co., which provides power for more than 4 million customers in four Southeast states, said the plan could cost it an extra $3.8 billion (in 2007 dollars) by 2030.

Southern could build about 900 megawatts worth of renewable capacity that turns biomass and methane from landfills into electricity, far short of the 6,000 megawatts of capacity needed to comply with the rules, a company spokesman said.

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