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CEO Roundtable: Debating The Boucher Bill

Utilities consider imposing a retail surcharge to fund clean-tech R&D.

Fortnightly Magazine - December 2008

aggressive target [for commercializing CCS]. A year has gone by, and now it’s a very aggressive target.”

Meanwhile, the U.S. Supreme Court ruled that carbon was a pollutant under the Clean Air Act, Congress debated the merits of various GHG-regulation proposals, and coal’s story began to resemble the sad tale of nuclear energy after the Three Mile Island accident. But then, as happened in 1976 with GRI’s formation, a coalition came together to reclaim coal’s future.

The National Mining Association and the United Mine Workers of America, along with several of the country’s biggest coal-burning utilities, threw their support behind a bill co-sponsored by Congressmen Rick Boucher (D-Va.) and Fred Upton (R-Mich.) to assess a surcharge on retail electricity sales. H.R. 6258, the Carbon Capture and Storage Early Deployment Act , would raise about $1 billion a year to finance private research, development and demonstration (RD&D) of CCS technology.

“This legislation is absolutely essential if coal-fired electric utilities are to continue using coal in a carbon-constrained economy,” Boucher told attendees at the Edison Electric Institute (EEI) Finance Conference in November 2008. “We know we cannot rely on the regular appropriations and budgeting process of the Congress to develop these technologies in the near time frame.”

The Boucher-Upton bill has garnered support from many companies in the U.S. investor-owned utility industry, including most members of EEI and EPRI. At the same time, however, even some supporters of the bill question the wisdom of funneling surcharge funds exclusively into CCS, just one of many possible approaches to GHG abatement. To further examine the Boucher bill and its structural approach to funding RD&D, Fortnightly hosted a roundtable discussion among four utility leaders:

Mike Chesser , Chairman & CEO, Great Plains Energy/KCP&L and Chairman of EPRI;

Ralph Izzo , Chairman, President & CEO, Public Service Enterprise Group;

Mike Morris , Chairman, President & CEO, American Electric Power, and past Chairman of EEI; and

Bob Catell , Executive Director and Deputy Chairman, National Grid.


Research Agenda

Fortnightly: What’s your position on the concept of a surcharge on electricity sales to fund an RD&D effort? Is it necessary, desirable and realistic?

Chesser: If you want to make inroads in restricting the use of carbon, it’s necessary. Experience has shown you get a much better return on your investment [when it’s privately funded], although a broad group should oversee that funding, not just only from the industry but interests from all across our community.

The other thing to emphasize is that we should focus on all technologies, not just carbon sequestration. There’s a very real possibility that we could have a longer stretch than we thought where we wouldn’t have to build any base load [capacity] if we could develop renewables, including solar, and storage and efficiency technologies quickly enough.

Morris: I may see things a little differently than my good friend Mike Chesser does. I had the opportunity yesterday to do a one-hour TV piece with both Congressmen Boucher and Upton on this very bill, and I have testified in front of Boucher’s