Recently I happened to speak with a utility CEO who sighed to me that, well, even if cap-and-trade dies in the Senate, my trade association (the Edison Electric Institute) tells me that EPA coming after us with new rules is a real threat at the end of the day — we’re best off just cutting some deal with Congress.
The Obama administration and promoters like Barbara Boxer are hoping this strain of Potomac Fever spreads. Boxer regularly menaces audiences with the threat that they’d much rather work out some scheme with her than have the administration let EPA out of its cage. I’ve read Waxman-Markey and I know Barbara Boxer’s proclivities, so I fail to see the attraction of rolling over on legislation rather than fighting the regulation whose premise — EPA’s endangerment finding — is on its face wildly violative of the Administrative Procedure Act, as will be any fruit that grows from its poison tree, IMO. Besides, killing the bill in the Senate — having first raised the prospect of a Congressional Review Act vote to block EPA, thereby making cap-and-trade and the global-warming agenda a major campaign issue for 2010 — sounds less like the greater of two threats than an invitation for a lasting political game-changer.
Of course, I’ve mentioned before another syndrome afflicting DC lobbyists — both company and trade association reps — who live in fear not of things being adopted that are bad for their employer or members, but of hearing that something happened that they can’t claim they were “at the table” for. A claim to having been part of the deal enables claims like boy you should’ve seen what I protected you from. So, Gucci Gulch and other Capitol Hill eddys are lousy with lobbyists always pushing some scheme as opposed to fighting them.
Trade association reps confront a particular nuance in that their groups generally consist both of rent seekers and market competitors, which encourages promoting some “deal” that gives everyone a portion of a loaf while also taking away much more of another, as we see with cap-and-trade.
All of which leads me to the following reminder of the legislative process in an E&E Daily story today, in the context of how the Senate might disrupt the carefully bartered House cap-and-trade, rationing-and-rents scheme:
The House bill’s authors also pushed President Obama to break his campaign promise to auction off 100 percent of the allowances. The House bill ultimately gave away 85 percent of the emissions permits in the early years of the cap-and-trade program, with the remaining 15 percent of permits auctioned.
For electric utilities, the House incorporated recommendations from the Edison Electric Institute, the lead trade group for investor-owned power companies, by sending 30 percent of the cap-and-trade program’s allowances to state-regulated local electric-distribution companies, which are instructed to use any revenue to protect consumers from electricity price increases. All utility sector allowances would also be distributed 50-50 between companies based on their historic emission levels and retail sales.
So EEI has struck an allocation of energy use “allowances” — a license to to pick your pockets — which helps to explain why they think that troublesome member companies who are more interested in going about their business than harming the economy with shady, temporarily ,self-serving deals, ought to just leave things to the Washington professionals who, incidentally, will not suffer under this scheme at all. Far from it, in fact.
Here’s the test: ask the rent seekers who insist that a cap-and-trade deal is such great shakes if the threat is just as pressing if Congress opts for a direct tax on emissions (which would be less costly, less inefficient, and less harmful to seniors and the poor). Of course, no one gets paid off that way. We’ve already seen how quickly rent seekers go from hair-on-fire, must-act-now to well, let’s not be rash and act hastily.
This cap-and-trade enterprise now being considered by senators stinks to high heaven. While the interplay between two concurrent blockbusters — health care “reform” and an enormous energy tax — remains to be worked out, I suspect voters will turn up the August heat, making the odor so foul that the Senate will decide that it just can’t fit in a vote, what with all of these recesses to consider. At which point, my early predictions of Sorry you took that risky vote, House, but this is BTU Redux will prove prescient. CEOs like the one I encountered ought to realize victory is the only option, and it begins but certainly does not end in the Senate.