As California regulators prepare a final strategy to cut greenhouse gases under the state’s landmark climate change law, AB 32, energy marketers, producers, and consumers worry about financial risks and seek the inclusion of safeguard measures. In comments filed with the California Air Resources Board, the Alliance for Retail Energy Marketers expressed fears about cost shifting among various players in the state’s power market, particularly should the plan’s promise of 33 percent renewable energy fail to materialize. The alliance represents electric service providers who serve California electricity customers who opted for direct access to power generators. Direct access was curtailed in the aftermath of the state’s electricity deregulation gambit earlier this decade. While the alliance endorsed a carbon emissions cap-and-trade program to carry out AB 32, it seeks protections against the potential for any trading market to shift major amounts of money within the industry that could financially destabilize some companies. The Air Board, charged with developing a blueprint to cut greenhouse gases under AB 32, is struggling to release a draft final plan. Under the law, the Air Board is mandated to approve the plan before the end of the calendar year. The Utility Reform Network told the state air regulators October 2 that the coming plan should levy carbon fees aimed at reducing greenhouse gas emissions instead of creating a carbon trading market under a cap-and-trade system. The Los Angeles Department of Water & Power echoed concerns about the potential of a freewheeling emissions trading market to unfairly shift costs among energy companies and impact ratepayers. The department outlined those concerns in separate comments on a pending joint California Energy Commission-California Public Utilities Commission plan for placing the power industry under a cap-and-trade plan. It said that if emissions allowances sell for $100 per ton under that plan, because of its low carbon energy portfolio Pacific Gas & Electric would reap over $3.2 billion. It would gain the windfall largely by selling unneeded emissions credits to Southern California municipal utilities. The munis would have no choice but to buy the credits because they would need them to cover the emissions from their coal-heavy power sources. Two broad business coalitions issued warnings on the Air Board plan. The Los Angeles Area Chamber of Commerce said companies must have access to a ready supply of carbon offsets or they could face high costs. The AB 32 Implementation Group--composed of the California Manufacturers and Technology Association, California Chamber of Commerce, and other statewide business groups--called an economic study the Air Board released last month in support of its coming carbon reduction plan a “fairy tale.” The study showed the plan would bolster economic growth in the state. Editors’ note: For a more detailed version of this story, please see our sister publication E=MC2 – Energy Meets Climate Challenge. You can find it at www.energymeetsclimate.com
