By Jim Snyder and Silla Brush - 11/10/09 11:00 AM EST
The Senate Finance Committee, chaired by Sen. Max Baucus (D-Mont.), is holding a climate hearing on Tuesday to examine how addressing climate change fits in with fixing the economy and creating jobs.
Eleven other Democrats voted aye, and the measure was reported out of committee without amendments or the participation of Republicans, who boycotted the vote.
Representatives from the International Brotherhood of Boilermakers, Iron Shipbuilders, Blacksmiths, Forgers and Helpers; the Nuclear Energy Institute; American Enterprise Institute; the utility Pacific Gas & Electric; and the American Council for Capital Formation are expected to testify at the Finance hearing.
Climate bills, including the one approved by the Environment and Public Works (EPW) panel, use a cap-and-trade system to cut emissions. But some senators have suggested relying instead on a carbon tax or direct regulation, whereby utilities and other polluters are given a target and told to meet it.
The cap-and-trade option may indeed have the most support in Congress, but the prevailing wisdom on K Street is that a final bill will have to look significantly different from the EPW’s cap-and-trade legislation to reach the 60-vote threshold.
Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) are working on a compromise plan that could include more support for nuclear power and offshore drilling. Others, like Baucus, have said the emissions reductions in the EPW bill are too aggressive.
Baucus’s panel is in charge of a central issue: how to distribute valuable allowances companies would have to hold to cover their emissions.
The distribution of allowances is dividing senators along regional lines. Senators from states more reliant on coal to produce their power are unhappy with a formula developed by the Edison Electric Institute (EEI), a trade group that represents shareholder-owned utilities.
The formula, which is the basis for the House and Senate climate bills, distributes allowances based equally on emissions and sales. Utilities that use a lot of coal want more weight given toward emissions. Under this scenario, coal-fired utilities would collect more allowances, which they say are needed to keep costs in check and help them switch to cleaner sources of power.
Utilities with more nuclear and renewable power say their consumers have been paying higher electric bills for lower-emitting power sources and now deserve a reward.
Finance Committee ranking member Chuck Grassley (R-Iowa) last month wrote Kerry and Sen. Barbara Boxer (D-Calif.), the chairwoman of the EPW committee, that the formula “is in effect a transfer of wealth to the East and West coasts at the expense of other regions, like the Midwest,” which uses more coal.
Sen. Tom Harkin (D-Iowa) is also writing a letter opposing the formula. Grant Gustafson, Harkin’s spokesman, said he and other senators believe the 50/50 split “will unfairly and disproportionately raise electricity costs in certain regions of the country.”
“Sen. Harkin believes this inequity can easily be resolved by simply requiring that electricity-sector allowances be allocated entirely on the basis of emissions,” Gustafson said.
The CEO of MidAmerican Energy, a utility that operates in Iowa, has been a leading critic of the EEI formula.
Dodd to release financial reform bill
Sen. Chris Dodd (D-Conn.), the chairman of the Senate Banking Committee, will unveil legislation Tuesday that would overhaul the nation’s financial system.
Dodd has worked for months behind the scenes with Sen. Richard Shelby (Ala.), the panel’s top Republican. The two senators have a history of crafting bipartisan financial legislation, but they have been unable to agree on key elements in the current debate.
Dodd’s legislation will reflect largely his own priorities in the financial overhaul, and will likely lead to significant debate not only with Republican critics but also with Democrats on the committee.
Dodd has consistently backed a new agency to regulate consumer financial products, a centerpiece of the Obama administration’s proposal to alter the regulatory landscape. Shelby and nearly all Republicans strongly oppose the notion.
Dodd is also expected to call for the consolidation of the nation’s four banking regulators into one, an idea that has been strongly opposed by House Financial Services Committee Chairman Barney Frank (D-Mass.) and the existing regulators.
Dodd and Shelby have both been routine critics of the Federal Reserve’s oversight of banks leading up to the financial crisis. Meanwhile, Frank and the Obama administration have backed legislation that would give new powers to the Fed to oversee large, systemically important financial institutions.
Frank is marking up legislation that would create a council of regulators to oversee systemic risk. Dodd’s legislation will likely give more authority to the systemic council than the Fed.
The House is eyeing a vote in early December on the broader financial overhaul.
Dodd’s office said last week that the bulk of the markup in the Senate would take place after Thanksgiving, but it could last many weeks with senators currently consumed with the healthcare debate.
Senate Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) will hold her first hearing on financial reform issues on Nov. 18. Lincoln, locked in a tough reelection race, only recently became chairwoman of the committee, which has jurisdiction over the Commodity Futures Trading Commission (CFTC). The commission would gain new powers to regulate financial derivatives.