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Exelon CEO Emphasizes Cutting Consumer Costs Is Key Issue in Climate Debate

On Monday in his speech at the National Association of Regulatory Utility Commissioners’ annual convention, Exelon Chairman and CEO John W. Rowe said that current legislative proposals on climate will minimize costs to consumers while addressing the looming threat of global warming.

A cap-and-trade system is cheaper than any of the alternatives, and current proposals include protections to avoid sharp price increases for consumers, according to the Exelon executive, whose company is the largest nuclear power generator in the U.S. As such, it has little to fear from any legislation regulating greenhouse gas emissions.

“I believe the Senate can pass bipartisan climate legislation this Congress,” said Rowe. “The support of wavering senators will turn on whether they are reassured on the issue of costs, and I am confident they will be.”

How Climate Legislation Reduces Consumer Costs

Rowe described three ways that the current climate proposals will work to limit consumer costs. First, he explained that cap and trade is a market mechanism that is less expensive per ton of carbon removed than direct government requirements to purchase wind and solar. Second, Rowe pointed to the free emissions permits that would be given to local delivery companies to benefit their customers. Utilities would be required to use the proceeds from these permits to help customers affected by higher energy prices through rebates, low-income assistance, energy-efficiency programs, and other measures. Finally, he declared his support for the development of a “price collar” that puts a minimum and maximum on permit prices, ensuring that the cost increases in the early years are modest.

“Make no mistake: we are acting in one way or another to address climate change,” said Rowe. “As we act, the key consideration needs to be whether we are doing the cheapest things first.”

Taking exception to the idea that cap-and-trade would transfer wealth from the Midwest to the coasts, Rowe said that Exelon’s modeling indicates that electricity rates would not go up dramatically as a result of a climate bill. In fact, the modeling shows rates in Illinois, Minnesota, and Ohio would remain lower than rates in California and Massachusetts.

Exelon’s press release said that the company is not waiting for legislation to undertake its own effort to address climate change through Exelon 2020, an environmental and business strategy to reduce, offset, or displace more than 15 million metric tons of greenhouse gas emissions per year by 2020. In April 2009, Exelon announced that it had reduced its greenhouse gas emissions by more than 35% from 2001 to 2008.

Rowe’s Testimony Before Senate Committee

On Oct. 29, Rowe also testified before the U.S. Senate’s Committee on Environment and Public Works and stressed his support of prompt action to deal with the climate change issue.

“Exelon supports passage of comprehensive legislation to address the  greenhouse gas issue,” he told the Senate committee. “We need an economy-wide bill with realistic targets and timetables, an effective cost-containment mechanism, and an allowance allocation mechanism that awards allowances to electricity delivery companies to prevent dramatic consumer rate increases. Without prompt action, our industry will be caught in a carbon purgatory; we will lack the certainty we need to make the large-scale investments in clean generation that are necessary to both keep the lights on and meet the challenges associated with climate change.”

Rowe is the longest-serving CEO in the electric generation industry, having served in that capacity with a succession of companies since 1984. He has chaired the Nuclear Energy Institute, Edison Electric Institute, and the bipartisan National Commission on Energy Policy.

Sources: Exelon Corp., Business Wire

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