On June 26, 2009, the U.S. House of Representatives narrowly passed (219 - 212) a contentious federal climate change bill that calls for a cap-and-trade tax to limit carbon emissions beginning in the year 2012.  I am pleased to inform you that your U.S. Congressmen representing all of Southern Illinois opposed this legislation in the House of Representatives.   Your Cooperative adamantly opposes the legislation that has passed the U.S. House of Representatives.   This legislation has now moved to the Senate for consideration and ultimately a vote to determine the future of this legislation.

At this time, I would like to share some details of the climate change legislation and what it means to you, all energy consumers and our country.  First of all, let me explain the cap-and-trade tax plan.  The current legislation calls for a "cap" in emissions that equate to a 3% reduction in carbon emissions below 2005 levels by the year 2012.  At first, this doesn't seem to be a stringent reduction but I must tell you it is misleading because it doesn't account for the growth in energy consumption between the years 2005 to 2012.  This "cap" that is being publicized as a 3% reduction below 2005 levels actually equates to an approximate 25% reduction in carbon emissions in 2012 for your Cooperative.  One may ask - Why is this not achievable by the year 2012?  The answer is simple - There is no proven, commercially available, technology that utilities can purchase and install on coal-fired generation plants that captures the carbon emissions and sequesters it.  Industry experts predict that it may be some 8-10 years before this technology is proven and commercially available.  So we have legislation that has passed the U.S. House of Representatives that put a cap on emissions that is currently not possible to meet due to the technology not being available.

Given that utilities can't meet the cap on emissions, utilities would be forced to purchase emissions credits to meet the cap.  Our government officials recognized the catastrophic impact this would have on electric rates and the economy so the legislation calls for issuing a portion of the allowances to utilities to soften the rate impact.  Unfortunately, the allowance allocation formula implemented in the legislation is inequitable and creates extreme regional disparities across the country.  West Coast states and the Northeastern States would receive 100% of the allowances needed while the rest of the country, including the Midwestern states, would only receive a portion of the allowances needed.

The next issue is that utilities across the Midwest will have to purchase the needed allowances to comply with the legislation.  This would require your Cooperative to purchase the needed allowances from a new trading system (very likely CCX in Chicago) for gas emissions.

 

This carbon trading system would provide yet another opportunity for Wall Street trading firms, investment banks, hedge funds and other special interest groups to buy and trade these allowances for massive profits, driving the cost of allowances higher, causing you as energy consumers to pay more in your electric bill so that others may profit.  This carbon trading system will be controlled by the largest trading companies in the world and it wouldn't be long before they created derivatives, swaps and other trading schemes to make even more profits at our expense.

Supporters of this legislation like to predict that the price of each allowance will remain at $15 each in the year 2012.  The electric utility industry believes this number is extremely low and the actual market price could easily be $30, $50 or even higher.  Your Cooperative is very alarmed about and opposes the legislation that passed the U.S. House of Representatives.  This legislation in its current form is extremely detrimental to our region's jobs and family budgets.   Under the current legislation in its cap-and-trade tax plan, electric rates will certainly increase and could increase dramatically.  Not only will consumers across the country pay more in their electric bill, but they will pay more for a variety of other products that use electricity in the process of manufacturing those products or fuel used to transport those products.  The rise in electricity rates is only the beginning - it will cause many other cost increases as well.

  

Lastly, according to the CBO, this legislation would increase government revenues by $873 billion dollars from 2010-2019.  If this legislation was created to address Climate Change, one would think that the vast majority of this $873 billion dollars would be used to develop the technologies needed to capture CO2 and sequester it deep below the earth's surface.  Unfortunately, the vast majority of the additional dollars that you would pay in your electric bill under this legislation will not be used to develop these needed technologies.

If you share this concern, we urge you to call, write or email your U.S. Senators representing Illinois.  Together, we have the power to make a difference.  You can contact your U.S. Senators as follows:

               Senator Dick Durbin                                Senator Roland Burris

               309 Hart Senate Building                        387 Russell Senate Office Building

               Washington DC  20510                          Washington DC  20510

               PH:  (202)224-2152                                PH:  (202)224-2854

               Fax: (202)228-0400                                Fax: (202)228-3333