U.S. power utilities hail carbon bill compromises

NEW YORK Thu May 14, 2009 9:19am EDT

The United States Capitol Building is reflected in the water at sunrise in Washington, October 31, 2008. REUTERS/Jim Young

The United States Capitol Building is reflected in the water at sunrise in Washington, October 31, 2008.

Credit: Reuters/Jim Young

NEW YORK (Reuters) - U.S. electricity generators support compromises being reached by Democrats in the House of Representatives on proposed climate legislation, saying the changes would soften the impact on power bills.

"It makes (the proposed bill) more reasonable and we've always said we would be willing to support a more reasonable cap-and-trade bill," said Melissa McHenry, spokeswoman for American Electric Power, the country's largest burner of coal for generating electricity.

Democrats on the House Energy and Commerce Committee have agreed to a reduced target of a 17 percent cut of greenhouse gas emissions below 2005 levels by 2020. Many lawmakers had initially sought a 20 percent reduction.

In addition, a compromise has been neared on requiring utilities to generate power from renewable sources like wind, solar and geothermal. The original goal of 25 percent renewable generation by 2025 has been softened to 15 percent with a 5 percent gain in energy efficiency by 2020.

The committee hopes to pass the bill by next week.

Environmental groups will pressure lawmakers not to compromise too much as scientists say deep emissions cuts are needed to avoid the worst consequences of climate change including killer heat waves, floods and droughts.

But power companies say some compromises will be needed to get the program going.

"Obviously it's still going to raise electricity rates but it is a more reasonable approach," McHenry said about the compromises, adding AEP could not comment on the entire legislation because it has not been finalized.

Many power utilities, a political force throughout the country, have warned that strict emissions regulation could bring about higher electricity bills.

Utilities that burn large amounts of coal, which emits about twice as much carbon dioxide as natural gas, are widespread throughout the South and Midwest.

Jim Owen, a spokesman for the Edison Electric Institute, an association of shareholder-owned power companies, said the 17 percent target on emissions was still a "very aggressive target, particularly relative to the technologies that we believe are going to be needed to meet that kind of target."

Noting that power companies may soon have to make substantial investments in new and sometimes unproven technologies, like carbon capture and storage, Owen said one compromise being discussed would allow states to meet some renewable power requirements by boosting efficiency gains from 5 percent to 8 percent.

He said this was useful because some states are better suited for developing solar and wind than others.

"That would have the important effect of softening the economic impact for customers," he said.

(Additional reporting by Scott Disavino; Editing by David Gregorio)

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