More Corporate Welfare For Polluters?

transmissionlineAs the Waxman-Markey climate bill continues to slowly crawl to an upcoming vote,  more and more debate emerges.  This time it’s Blue Dog Democrat Collin Peterson of Minnesota taking the reins for energy producers who already emit too many noxious emissions into our environment.  Congressman Peterson represents rural electric producers (mainly ones who burn coal and ethanol to produce electricity) and claims this bill leaves them behind.

Congressman Peterson is protecting the exact companies (i.e. coal and ethanol plants) that this bill is trying to force to make more cleaner and more efficient.  Of course he shouldn’t expect good favor from this bill (i.e. tons of money).  Yet, by some twisted logic, that’s exactly what he’s asking for.

Peterson wants electric producers who burn coal and ethanol (see how the San Juan Generating plant is holding up in NM with their emissions production) to get back 100% of the allowances they pay for excess emissions.

To me this is like taking away your kid’s allowance because he’s bad, then giving it right back to him because he needs the money to be good.

Seeing how the fine paid by San Juan (which is owned by PNM) was the largest in state history, it is mind boggling to think how much money would be given away via 100% allowances nationwide.

Secondly, Peterson argues that many of the low-income people in his Farm Belt region would be affected more than others in the nation.  While there may be a small increase in his constituents’ rates (mostly a result of electric generators in this area not being clean or efficient enough and thus they have to spend large amounts of money to get their plants in order) it will not add up to the thousands of dollars that these dirty energy representatives claim it will.

The Congressional Budget Office released a report last Friday that estimates that the total costs passed on to households from the Waxman-Markey bill will be a whopping $175 a year.  And, the report says, the low-income consumers that Peterson talks about won’t have their rates raised – instead, they’ll actually get back about $40 a year.

So once again, I have to ask the question:

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Is it PNM’s turn for a bailout?

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If you pay enough attention to what’s been going on as of late, you’d figure that PNM is about to be swimming in money. Not money from profits based on their energy production (in fact, PNM posted losing quarters all of last year), but in “help” from state and federal sources.

First off, PNM has been given free rein when it comes to rate increases.  Last year the state Public Regulation Commission approved PNM for a 4.4% ($24 million) rate increase. That was big, but not quite the $82 million PNM originally wanted. PNM also requested a fuel clause, which would have given them the ability to adjust their rates to adjust to fuel costs. Many spoke out against this rate clause, saying it was simply a thinly-veiled rate hike designed to help PNM make up some of the $58 million that they didn’t get in the rate increase. It was determined that there wasn’t a need for the fuel clause and PNM’s request was rejected.

Now there’s word of another rate increase at the beginning of this year. PNM recently announced they will impose a 9.7% or $77 million rate increase starting in July. According to PNM’s CEO Jeff Sterba, the increase “is the latest step in our ongoing efforts to ensure adequate recovery of PNM’s costs and restoring shareholder value.”

Funny, I thought the reason PNM sold their gas holdings and got a credit line increase (increased to $300 million) last spring from the PRC was to improve PNM’s profits (and thus decrease how much they pass on to consumers) and help improve PNM’s credit rating.

One has to wonder whether last year’s profit losses, the large costs paid out to upgrade PNM’s San Juan Generating Plant, and the recent $7 million fine for emissions from the San Juan plant have anything to do with PNM’s recent request for a rate increase.

But now PNM is taking it to the federal level.

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PNM and Carbon Pollution: Will consumers get the shaft?

Jeff Sterba

PNM Resources CEO Jeff Sterba

Right now in Washington, members of Congress are debating a twist to climate control legislation that could lead to a massive corporate giveaway for oil and gas companies.

The Energy & Commerce Committee of the U.S. House of Representatives is considering the American Clean Energy and Security Act of 2009, (ACES) a comprehensive climate and energy legislative package that would limit carbon pollution and require the development of renewable energy. The bill is expected to go on to the full House of Representatives, and later this summer, to the Senate.

The fact that Congress is finally moving to limit carbon pollution by “capping” the overall amount of emissions allowed and issuing permits to emit carbon within those limits is a crucial step toward slowing global warming. Read what Al Gore has to say about it here.

What’s not so great is what Congress may decide to do with the trillions of dollars that could be generated by requiring companies to pay for the permits.

The plan that makes the most sense is to make companies pay for the permits, therefore making them financially responsible for limiting their emissions and forcing them to develop alternative forms of energy. The estimated billions that would be raised by a 100 percent auction of the permits would be returned to energy customers – you and me.

But this week, news emerged that some in Congress are apparently being swayed by the powerful oil and gas companies, who want Congress to agree to give them the permits for free.

New Mexico’s own Jeff Sterba (CEO of PNM Resources) was among a long string of utility executives who told the House committee last month that requiring companies to cap carbon emissions and develop alternate forms of energy would force them to charge their customers more.

New Mexicans know PNM well.  It’s the company that was just fined $6.9 million for federal and state air quality violations at the coal-fired San Juan Generating Station in the Four Corners. According to the New Mexico Environment Department, it was the largest fine ever levied by the state for air quality violations.

In light of those violations and others, New Mexicans need to question whether we can really trust utility companies to act on their own to reduce carbon emissions.

Moreover, if there is really no penalty for polluting (because the fines will be given right back to energy companies like PNM), then where is their incentive to “pass the savings” back to the consumer?  The whole construct just doesn’t make sense.

Congress needs to resist pressure from the oil and gas industry and hold companies financially responsible for their carbon pollution. Implement the carbon caps – and give the billions of dollars raised by the 100 percent auction of the carbon pollution back to energy consumers where it belongs.