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U.S. Rep. Charlie Gonzalez Wants to Give San Antonio’s Municipal Utility a Free Ride

April 24, 2009

U.S. Rep. Charlie Gonzalez Wants to Give San Antonio’s Municipal Utility a Free Ride

Statement of Andy Wilson, Global Warming Program Director, Public Citizen’s Texas Office

U.S. Rep. Charlie Gonzalez, a Democrat from San Antonio, has joined a group of conservative Democrats who say that a federal cap and trade bill should give utilities free permits for all their current carbon dioxide emissions.

Gonzalez claims that he has taken this stance because “it’s all about the consumer,” but clearly, he has his facts wrong. If you’re really concerned about consumers, giving away pollution credits for free is about the worst way you can write this bill. Giving away allowances would force customers to pay for industry and utilities’ right to pollute without even cutting carbon emissions.

Giving away allowances has historically been a failure and current economic modeling shows it will hurt low-income residents the most. When Europe gave away carbon credits during the first years of its cap and trade program, polluting industries made windfall profits, did not actually cut their carbon dioxide output and passed on “compliance costs” to consumers anyway. A recent Environmental Protection Agency (EPA) study of the Waxman/Markey cap and trade bill also shows that giveaways will be “highly regressive” and affect low-income households more than any other segment of the population.

At best, this is a bailout and a free ride for the polluters. At worst, it will create windfall profits for huge energy companies at the expense of every lower- and middle-income family in Texas. However, a full auction of credits fixes these problems.

A good climate change bill will create billions of dollars of revenue by charging large polluters for the dangerous pollutants they’ve been emitting for decades. This money could then be returned to taxpayers, particularly low-income households, to protect them from any price increases that energy companies may try to pass through to consumers. Another portion of the money could also be used to pursue aggressive energy-efficiency programs, so that citizens can save even more money by using less electricity. Every dollar spent on energy efficiency will then help reinvigorate the local economy by putting people back to work doing energy audits and retrofitting inefficient homes.

According to the EPA’s recent economic analysis, a well-crafted climate bill could even leave low-income families better off than they are now:

Assuming that the bulk of the revenues from the program are returned to households, the cap-and-trade policy has a relatively modest impact on U.S. consumers. (. . .) Returning the revenues in this fashion could make the median household, and those living at lower ends of the income distribution, better off than they would be without the program.

Congressman Gonzalez must decide soon if he wants to this bill to benefit City Public Services, San Antonio’s municipal utility, or the citizens he is supposed to represent. If Gonzalez really wants protect consumers and the families in his district, he should reverse his position on the Waxman/Markey cap and trade bill and support a full auction of credits.