Democrats on the House Energy and Commerce Committee next week will begin debating one of the most critical pieces of the Waxman-Markey climate bill: how the government will distribute the emissions permits, and the corresponding “allowance value,” under a cap and trade program for greenhouse gases. The formula Congress arrives at will be key to managing consumer costs.
As events unfold over the next few weeks, here are a few things to keep in mind:
40 Percent to Consumers. A group of key swing Democrats have requested that 40 percent of the allowances initially be given for free to the utility sector as proposed by the U.S Climate Action Partnership. It’s important to note that this is not a free allocation to the polluters – i.e. electricity generators. Instead, this approach essentially puts the allowance value in consumers’ pockets by distributing permits at no charge to the local utilities that provide electricity and natural gas to American households. Those “local distribution companies” (LDCs) are regulated by public utility commissions, who would be able to ensure that the utilities pass the value along to consum... Read more