As the House Energy and Commerce Committee marked up climate change legislation Tuesday, MidAmerican Energy Holdings Co. Chairman David L. Sokol said his company would oppose the bill because it would result in onerous rate increases for customers of affiliates MidAmerican Energy Co. and PacifiCorp.

The bill (HR 2454), authored by Committee Chairman Henry Waxman (D-CA) and Rep. Edward Markey (D-MA), “is a cap-and-trade program that will force our customers to pay two expensive costs. First, they will pay the cost of emissions allowances purchased on a complex auction market that will do nothing to reduce greenhouse gas [GHG] emissions; and second, they will pay the cost of replacing our existing fossil fuel generation facilities with low-carbon alternatives,” Sokol said.

But contrary to Sokol’s claim, Waxman and Markey have agreed to give utilities and other emitting industries emission credit allowances for free — rather than auction them — during the initial years of transition to a low-carbon environment. In fact, state-regulated local electric and natural gas distribution companies would receive the lion’s share of the free emission allowances.

The electricity sector would receive 35% of all emission credit allowances for free, which represents 90% of current utility emissions. State-regulated local electric distribution companies would get 30% of the allowances, and merchant coal and long-term power purchase agreements would get 5%. State-regulated local gas distribution companies are on tap to receive 9% of the emission credit allowances. The free allowances for electric and gas would phase out between 2026 and 2030 (see Daily GPI, May 18).

Nevertheless, Sokol said Des Moines, IA-based MidAmerican, which provides electricity and gas to customers in several Midwest states, could not join the Edison Electric Institute in endorsing the Waxman-Markey bill. “Cap and trade will have a profoundly negative impact on people who are struggling to make ends meet in an economy still in distress.”

Energy companies that have come out in support of the legislation include Constellation, Exelon, FPL Group, National Grid, Progress Energy and PSEG.

The centerpiece of the climate change legislation, which is pending in the House energy committee, is a system that would set a cap on carbon emissions and allow polluting industries to purchase and trade emission credits to comply with the cap. Mark-up of the legislation got under way Monday. Waxman has indicated that he wants to vote the bill out of committee by the Memorial Day recess, but some believe that may not be realistic. At the rate mark-up was going Tuesday, Rep. Bart Stupak (D-MI) said it could take 33 days and eight hours to finish the bill. Rep. Joe Barton of Texas, the ranking minority member on the committee, said Republicans alone planned to offer more than 400 amendments to the bill.

Sokol said MidAmerican supports carbon emission reductions and believes that the electric sector can achieve the 83% reduction in emissions by 2050 called for in the Waxman-Markey bill while avoiding the costs of emission allowances.

“We will therefore continue to work with Congress on an alternative compliance mechanism to be enacted for the states that will reach the same [GHG] emission goals in Waxman-Markey.”

In addition to PacifiCorp, MidAmerican Energy Holdings in the U.S. owns CalEnergy and pipelines Kern River Gas Transmission Co. and Northern Natural Gas Co.

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