Mayo Shattuck, Feeding from the Trough

Constellation Energy Group, the parent company of Baltimore Gas and Electric has copied General Electric’s new raison d’etre—Subsidymagination and jumped whole hog onto the green pork bandwagon. Yesterday, chairman Mayo Shattuck announced CEG’s support for the Waxman-Markey cap and trade bill, which has quickly become the rent-seeker’s dream/ratepayer’s nightmare we all knew it would.

Tim Carney in the Washington Examiner explicates the scam:

Currently, Waxman’s bill gives away about half the credits, with most free credits going to the power industry. Edison Electric, the trade group representing these companies, has endorsed this bill.

It’s unsurprising the power companies should get their way. Data compiled by the
Center for Responsive Politics show that the electric utility industry’s political action committees contributed $12.3 million to candidates last election—more than the PACs of the oil and gas, commercial bank, investment, real estate, or telecom industries—and nearly as much as all defense PACs.

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Last quarter, the Edison Electric Institute spent $2.6 million on lobbying, placing it 28th overall just ahead of defense giant Boeing. The group retained 17 outside lobbying firms and employed at least 11 in-house lobbyists…

So, when government gives credits to electric companies, it is simply giving money to those companies while making it more expensive for everyone else to do business. The utilities could sell the free credits unless Congress prohibits selling some credits, which would defeat half the purpose of cap-and-trade.

Waxman’s current bill, supported by power companies, will be touted as a industry-environment compromise, making some observers believe it is a moderate regulation. In truth, it is just as burdensome on the end-user—consumers and electricity users—but instead of government pocketing all of these added costs, some businesses will get a cut.

For the record Constellation is a card carrying member of the Edison Electric Institute.

The Heritage Foundation’s Center for Data Analysis analyzed the new modifications to Waxman-Markey:

For the most part, the changes focused on the distribution of the allowance revenue–the equivalent of tax revenue. There was also a slight easing of targeted emissions reductions for 2020, which resulted in a marginally lower economic impact. However, the new distribution of allowances created a less efficient pattern of government expenditures and more than offset the gain from the lower cap for 2020…

Though the proposed legislation would have little impact on world temperatures, it is a massive energy tax in disguise that promises job losses, income cuts, and a sharp left turn toward big government.

Ultimately, this bill would result in government-set caps on energy use that damage the economy and hobble growth–the very growth that supports investment and innovation. Analysis of the economic impact of Waxman-Markey projects that by 2035 the bill would:

·Reduce aggregate gross domestic product (GDP) by $9.6 trillion;
·Destroy 1,105,000 jobs on average, with peak years seeing unemployment rise by over 2,479,000 jobs;
·Raise electricity rates 90 percent after adjusting for inflation;
·Raise inflation-adjusted gasoline prices by 74 percent;
·Raise residential natural gas prices by 55 percent;
·Raise an average family’s annual energy bill by $1,500; and
·Increase inflation-adjusted federal debt by 26 percent, or $29,150 additional federal debt per person, again after adjusting for inflation

To reiterate this bill, should it become law will have a climatically meaningless effect of averting one nine hundredth of a degree of warming.

I’ve said time and again, that if you thought the 2007 BGE rate increases were bad, wait until our rulers unleash cap and trade upon the land.

Shattuck’s support for Waxman-Markey appears to be one of the unfortunate and unintended consequences of Mid-America Energy Holding’s failed attempt to purchase Constellation. Mid-America, rightly understands the ramifications of the bill for its customers. Mid-American’s chairman David Sokol said “The Waxman-Markey bill is a cap and trade program that will force our customers to pay two expensive costs. First, they will pay the cost of emissions allowances purchased on a complex auction market that will do nothing to reduce greenhouse gas emissions; and second, they will pay the cost of replacing our existing fossil-fuel generation facilities with low-carbon alternatives. Cap and trade will have a profoundly negative impact on people who are struggling to make ends meet in an economy still in distress.”

Writing in the Washington Post, Sokol reveals the dog’s breakfast awaiting Wall Street. “If you liked what credit default swaps did to our economy, you’re going to love cap-and-trade. Just read Title VIII of the bill, which lets investment banks, hedge funds and other speculators participate in the cap-and-trade market. They don’t have emissions to cut; they have commissions to make.”

Now, Mid-American does favor some form of emission reduction scheme, which I think are futile in whatever form they take. However, I applaud their honesty in calling a spade a spade.

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