Rent-Seekers Inc. Climate-change legislation helps a few big utility companies, but costs most Americans.By KIMBERLEY A. STRASSEL
www.wsj.comIt isn't often an energy company (of all things) gets to present itself as an environmental crusader, cozy up to Washington rulemakers, buy political protection, and pad its bottom line—all in one neat little announcement. So give Pacific Gas & Electric, PNM and Exelon credit for going for the gold.
The three utility giants have made news recently by quitting the U.S. Chamber of Commerce. Their finer sensibilities, they explained, would no longer allow them to associate with an organization lacking in environmental fervor. How dare the Chamber demand the Environmental Protection Agency be transparent about the science it is relying on to regulate all carbon energy use. Heresy! "As a company with a clear and strong position on the importance of addressing climate change," we must go our own way, lamented PG&E's CEO Peter Darbee.
Fortunately for Mr. Darbee, that way leads to the bank. As much as supporters of cap and tax would like to spin this as a new corporate ethic, the reality is less edifying.
The lesson here is that big business political rent-seeking is alive and thriving. John Rowe, chairman and CEO of Exelon Corp.
"The carbon-based free lunch is over," declared Exelon CEO John Rowe, neglecting to mention that his company's free lunch is only beginning. Under the House's climate-change bill, a few utilities—primarily those that have made big bets in renewable and nuclear energy—are poised to clean up once Congress hands them carbon emission credits. The bill sets aside 35% of the free credits for utilities. Exelon and other "renewable" utilities will get a huge piece of that pie.
An internal memo produced by Bernstein Research in June described how Mr. Rowe met with investors to rejoice that the House legislation will allow Exelon to rake in additional revenue—by some estimates, up to $1.5 billion a year.
Others will pay for this Exelon privilege, of course—notably, Midwestern customers of traditional coal utilities who will see their energy prices double. But hey, all's fair in love and lobbying."Seeking greater competitive advantage through regulatory means is, lamentably, an entrenched fact of life in some corporate boardrooms . . . But breaking with an organization and creating a public stage on which to tout a company's green credentials is overwrought. This is about profit, not Gaia," says Oklahoma Sen. Jim Inhofe.
Speaking of senators, the utility exodus conveniently came only days before Sen. Barbara Boxer released her own draft climate bill.
And Mrs. Boxer, also conveniently, left blank the portion allocating credits—all the better to bribe support out of key industry players by dangling precious goods in front of them. Emancipated from the Chamber, Exelon and others are free to play ball. The EPA's new emissions rules were also announced this week in tune with the Boxer bill, reminding companies that if they don't work with Congress, the EPA will make them pay without any compensating emissions credits.
Let's also not forget that Chicago-based Exelon and employees, including Mr. Rowe, contributed tens of thousands of dollars for their home-city presidential aspirant.
And that Mr. Obama's senior adviser, David Axelrod, was once a consultant to Exelon. In an energy world in which winners and losers are picked on the Potomac, there is no harm in reminding the president who his friends are.The move also keeps the mob at bay. Caught flat-footed by public outrage over health care, liberal interest groups are now attacking opponents of the Democratic agenda in personal terms. For the crime of talking straight about ObamaCare, former House leader Dick Armey and former New York Lt. Gov. Betsy McCaughey have been targeted and lost jobs in the private sector. The Natural Resources Defense Council is attempting a similar takedown of Chamber President Tom Donohue, in retribution on climate. The utility execs hope to avoid that bull's-eye. As extra insurance, Mr. Rowe this spring taped an ad with the Environmental Defense Fund, the smoothest of the green lobbies, to plump for climate legislation.
The Chamber's sin was giving the utilities the excuse to bolt by suggesting there be a "trial" on the science. The organization is doing its job, representing all its other members that will foot the climate bill. More astonishing than the exits from the Chamber is the news that the administration won't grant the business community's simple request to be transparent on its science. This obfuscation is becoming habit.
The stonewalling of the Chamber follows the muzzling of a career EPA scientist—Alan Carlin—who had questioned the scientific basis of the agency's moves. The agency is now considering shuttering Mr. Carlin's entire department—whose job it is to examine the economic consequences of agency rules.
Treasury only reluctantly released climate documents demanded by the Competitive Enterprise Institute, and only after redacting a section about cost. Under pressure, it recently released the complete documents. So only now are we discovering that Team Obama believes a climate bill could cost the economy up to $300 billion annually. The favored utilities don't mind this lack of transparency,
since the more consumers realize how much they will pay for climate legislation, the less they support it. And save a few lucky utilities, pay America will. Write to kim@wsj.com.
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This disgrace needs to be defeated soundly. Cap & Tax is worse than Health Care IHMO.
