Governor, Legislature Make Cap and Trade a Priority

The Oregon Legislature is moving ahead with one of the more sweeping and complicated pieces of legislation in modern Oregon history, targeting reductions in the state’s carbon emissions. Governor Kate Brown and the Democratic majority leadership in both the House and Senate are prioritizing passage of cap-and-trade legislation similar to a law enacted in California several years ago. As envisioned by Oregon’s political leadership, cap-and-trade will affect electric utilities along with the manufacturing and transportation sectors and everyone using gasoline, natural gas and propane.

The “cap” on emissions is a firm limit that is reduced over time. The “trade” part is the establishment of market that enables companies such as utilities or manufacturers to buy and sell allowances that let them emit specific amounts of carbon. Supply and demand sets the market price of the allowances.

As you can imagine, this will be complicated business and electric cooperatives such as Central Electric won’t be able to avoid the complexity. However, we will be helped by having an electricity supply that is more than 94 percent carbon emission free, mainly due to our access to hydropower from the Federal Columbia River Power System. I have written numerous times about the value of this renewable resource and the contradictory state policies and actions that undermine its value. I firmly believe that Oregon cannot meet its carbon reduction goals without recognizing the benefits of federal hydropower.

Such policy conflicts are difficult to comprehend. The potential for higher costs imposed on that portion of CEC’s energy supply not produced at the dams only worsens circumstances. CEC will also be impacted further by the likelihood of higher fuel prices since the transportation sector accounts for 40 percent of the state’s carbon emissions. One economic study concluded the cap-and-trade program will increase fuel prices 16 cents per gallon. CEC’s fleet management costs will certainly increase which ultimately impacts your electric rates.

It is too soon to say whether cap and trade will result in unfair or inequitable treatments among utilities.  We do know that with the political will and majority behind it, some form of cap and trade legislation is all but certain to pass this legislative session. A lot of questions still need answers from legislators. I am committed to meeting with legislators and working with the Oregon Rural Electric Cooperative Association to minimize the financial impact of this legislation on Central Electric’s rates as well as those of Oregon’s 17 other electric co-ops.

Central Oregon Hearing
The Oregon House of Representatives is holding four public hearings on cap-and-trade legislation away from Salem. Central Oregon’s opportunity to be heard is Saturday, March 2, at Central Oregon Community College in Bend, Cascade Hall from 9 a.m. to noon. I hope you will be able to attend.

Dave Markham
President and CEO