California utility customers could be economically punished by being in the lead in curbing greenhouse gas emissions, according to some participants in a major financial conference June 7. However, Pacific Gas & Electric believes there are long-term rewards for low-carbon behavior and that customers are likely to be shielded from financial fallout. Apparently the concern over California’s economic vulnerability stems from the likelihood that 25 states powered almost exclusively by coal-fired plants in the Midwest and Southeast will have enough political clout in the U.S. Senate to make sure they gain liberal access to emissions credits under any federal cap-and-trade system. California, on the other hand, “will have to buy credits from the coal guys,” said PG&E chief financial officer Chris Johns at the Citibank Investment Research Power, Gas & Utilities conference. Yet, if California utilities don’t need many credits because they are low carbon emitters, then customers should be somewhat shielded from price spikes. Panelists at the conference also noted that a regulatory shield might be imposed to ease customer economic pain in any carbon trading system. PG&E—which is attempting to carry the low-carbon banner among the nation’s utilities—supports “certain versions” of a cap-and-trade system. Johns said that “extreme environmentalists” want a price on carbon of $100/ton, but he thinks that is far too high and would create economic harm. “But it can’t be so low that nothing happens,” he added. “All of us would like to see a safety valve. So, if the price gets too high, our customers aren’t damaged,” Johns said.
