Southern Company CEO Tells Congress That Proposed Standard Will Impact Economy and Electric Reliability and Affordability

/PRNewswire/ -- Thomas A Fanning, chairman, president and CEO of Southern Company, today told members of Congress that proposed regulations aimed at emissions from power plants could reduce reliability, raise electricity prices, slow economic development and eliminate American jobs.

"My message today is that the reliability and affordability that Americans deserve could be at risk," Fanning said in testimony before the House Subcommittee on Energy and Power in Washington.

The U.S. Environmental Protection Agency has proposed regulation on further reducing air emissions from coal-fired power plants. The new regulation, known as Utility MACT (maximum achievable control technology), covers 125 different types of emissions. The EPA has allowed 60 days for comment.

"This is nearly a thousand-page rule with nearly a thousand more pages of technical supporting documents," Fanning said. "Sixty days is plainly inadequate for the industry to analyze this rule and its effects and offer meaningful comments."

Of greater concern, said Fanning, is the three years mandated for compliance.

"In just three years, utilities would have to develop compliance strategies for each plant, engineer solutions on a unit-by-unit basis, obtain required environmental permits, gain state public utility commission regulatory approval, actually procure and install the required technology, test the technology and implement any operational changes, and then demonstrate full compliance," Fanning said.

A study conducted for the Edison Electric Institute by ICF, Fanning testified, concluded that for the U.S. by 2015 over 80,000 megawatts of scrubbers and over 160,000 megawatts of fabric filter baghouses would have to be constructed and almost 80,000 megawatts of current coal capacity would have to be replaced.

"As the CEO of a company that has installed more pollution controls than any other utility," Fanning said, "I tell you that this cannot be done in three years."

Fanning also stressed that the Utility MACT proposal could cost the industry as much as $300 billion over the next five years.

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In Landmark Move, EPA Approves Higher Ethanol Blend for Vehicles Built in Last Decade

/PRNewswire/ -- Growth Energy announced today that U.S. jobs will be created, carbon removed from the air, and our national security made stronger with a decision by the U.S. Environmental Protection Agency today to raise the amount of ethanol that can be blended into our fuel from 10 percent (E10) to 15 percent (E15) for all vehicles built in the last decade.

The decision today to permit E15 for 2001-to-2006 model year vehicles follows an October decision by EPA to permit blends up to E15 in vehicles 2007 model year and newer. The EPA was responding to a regulatory petition, the Green Jobs Waiver, filed in March 2009 by Growth Energy, America's leading voice for ethanol supporters and producers.

A full move to E15 creates a bigger market for American ethanol that could help create as many as 136,000 new jobs in the United States and eliminate as much as 8 million metric tons of GHG emissions from the air in a year — the equivalent of taking 1.35 million vehicles off the road. Increasing the domestic, renewable fuel supply would also displace some of the 7 billion gallons of oil that is imported every day into the United States from countries such as Venezuela, Saudi Arabia and Nigeria, at a cost of more than $300 billion annually to our economy.

"This is a bold move forward, changing America's energy future for the better," said Tom Buis, CEO of Growth Energy. "Increased use of ethanol will strengthen our energy security, create U.S. jobs, and improve the environment by displacing conventional gasoline with a low-carbon fuel."

Buis added that with engine and emissions systems testing on cars 2001 through 2010 complete – and showing no issues with using E15 as a fuel – EPA's approval of E15 should be extended to older vehicles to make continued progress in reducing America's dependence on foreign oil.

"There are many more steps we can take toward achieving our energy security and environmental goals. We commend the EPA and we urge them to continue testing E15 for all vehicles, so that every American motorist has the opportunity to use a blend of fuel that is proven to be better for our economy, our security and our environment."

The previous E10 standard – which permits up to 10 percent ethanol blended into fuel – was set in the 1970s to help spur the growth of a domestic, renewable fuels industry in answer to America's first major oil crisis, engineered by OPEC. Since then, the United States has remained addicted to foreign oil; two-thirds of the oil used in this country comes from overseas.

In March 2009, Growth Energy filed a petition with EPA to permit the raising of that regulatory cap on the ethanol blend from 10 percent to 15 percent to displace more foreign oil.

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Atlanta Gas Light's Residential Rates to Increase 90 Cents per Month

/PRNewswire/-- Following a 4-1 vote October 27 by the Georgia Public Service Commission (PSC), residential customers of Atlanta Gas Light will receive a 90-cent monthly net increase in service rates effective November 1. The adjustment, the first base rate increase for the company since 1993, equates to an overall increase of one percent for the typical residential customer's annual natural gas bill. The adjustment will be reflected in the monthly Atlanta Gas Light charges as billed by certificated gas marketers to customers.

After weighing evidence and hearing testimony during the last six months, the PSC concluded that a $26.7 million increase in the company's revenue requirement was warranted to provide the company with sufficient revenue to meet reasonable expenses, pay interest on debt, continue to attract capital at favorable rates and provide a reasonable return to shareholders in order to continue to attract investment. The company originally sought $54.2 million in additional revenues in its case filed May 3, 2010, before adjusting the amount in October to $48.2 million to reflect more current economic conditions.

The company expects a final written order to be issued within the next 30 days, at which time parties to the case have 10 days to file for reconsideration of the decision with the PSC.

"Although we made a strong case for a larger revenue requirement to fund our service obligations, we recognize the economic climate weighed heavily on the commission as it worked to find the right balance for the company, our customers and shareholders," said Suzanne Sitherwood, president, Atlanta Gas Light.

"It is never an easy decision to increase rates, particularly in a difficult economy," Sitherwood said. "However, the action by the PSC provides necessary revenues to sustain our operations and meet the growing demands for compliance and safety work, while improving our customer service levels."

The PSC also approved a rate-design change that closes the cost-of-service gap between residential and commercial customers. Small commercial customers with a Designated Design Day Capacity (DDDC) factor of less than 7.0, which includes approximately 82% of all commercial customers, will see no rate increase or a small decrease. Large commercial customers will receive a monthly increase in their total bill similar in percentage to that of residential customers. In addition, monthly rates charged to agricultural customers will be reduced by $73 on average, particularly to bring poultry growers' rates more in line with general commercial accounts and help them better manage peak costs during winter.

The company also was ordered to investigate whether additional senior citizens might be eligible to participate in Atlanta Gas Light's senior discount program. Individuals age 65 or older with annual income of $14,355 or less are eligible to receive a monthly discount of up to $14.00.

Other details and provisions of the decision include:

* Acceptance of a revenue requirement of approximately $450 million, which equates to an unadjusted increase of approximately $1.46 per residential customer.


* Two changes in the company's surcharges totaling approximately $12.1 million annually, which will offset the impact of the rate increase by approximately 56 cents per month on the customer's monthly bill. This includes a temporary shift of $6.5 million from the Universal Service Fund to fund the Senior Citizen Discount Program, and acceptance of an October filing by Atlanta Gas Light to reduce the environmental cost recovery surcharge rate for an annual reduction of $5.6 million.


* Established an authorized return on equity of 10.75 percent, which is within the estimated range of 10.5 percent to 11.25 percent recommended by the company.


* Approval of a capital structure for the company of 51 percent common equity, 44.63 percent long-term debt and 4.37 percent short-term debt.


* A return to a traditional method of calculating depreciation expense using net value methodology with a salvage rate of negative 30 percent.


* Approval of an in-home appliance repair program that permits Atlanta Gas Light service technicians to perform minor repairs of low cost and short duration when responding to the home for other purposes, while providing referrals to Natural Gas Advantage Dealer companies for more substantial repairs or appliance replacements.


* Funding of the new Customer Care Center in Riverdale, Georgia, to better handle customer issues and support 74 new jobs in Georgia.


* Increase the number of service technicians on staff to make them available to reduce the average time to establish service and fulfill other customer orders from five business days to three.


* Adoption of a new acquisition synergy sharing policy that is expected to hold down future operating expenses by incentivizing the company to make prudent utility acquisitions that capture savings for customers while insulating them from risk of increased costs from such transactions. Customers will share equally in any savings from future transactions after the company demonstrates savings through a future proceeding.


* Allocation of $4.4 million in annual revenue to the company to recognize equitable treatment of current and ongoing savings produced from the acquisition by AGL Resources of NUI Corporation. Evidence in the case demonstrated that since 2005 approximately $150 million in savings were generated from previous acquisitions which were applied to reduce Atlanta Gas Light's operating expenses.


* Improvements to technology systems intended to provide quicker response times and greater capacity to perform additional marketer and customer services.

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Nationwide Low-Carbon Fuel Standard Would Increase Global Greenhouse Gas Emissions, Study Finds

/PRNewswire/ -- The implementation of a nationwide low-carbon fuel standard (LCFS) in the United States would increase global greenhouse gas emissions by up to 19 million metric tons each year - contradicting the claim of LCFS advocates that the standard would reduce such emissions - according to a study issued today.

The study assumes that because an LCFS would prevent American refineries from importing petroleum obtained from oil sands in neighboring Western Canada, the United States would instead have to import more oil in tankers from the Middle East and elsewhere. At the same time, the Canadian oil would be shipped in tankers across the Pacific to China and other Asian locations.

The study calls this long-distance movement of oil thousands of miles around the world in tankers a "shuffle" that would result in higher carbon dioxide emissions than simply extracting the Canadian petroleum from the oil sands for U.S. consumption, due to emissions created by shipping the oil such great distances.

Barr Engineering Company of Minneapolis conducted the study for members of NPRA, the National Petrochemical & Refiners Association.

"In conducting this technical study, we looked at the most accurate data publicly available, and the conclusion was clear," said Joel Trinkle, senior air quality consultant at Barr and one of the authors of the study. "Crude shuffling under a nationwide LCFS would substantially raise overall greenhouse gas emissions."

The study found that:

-- "A LCFS implemented in the U.S. results in a notable increase in
greenhouse gas emissions due to the displacement of Canadian crude
imports to the U.S. and re-routing of crude imports and exports to
accommodate this displacement. ... Nearby Canadian crude sources
would be diverted to regions not affected by LCFS and replaced with
supplies from distant parts of the world." (Page 2)
-- "While it is likely that LCFS would change the mix of crude imports to
the United States, LCFS implemented in the United States is not
expected to change overall trends in energy use and demand for crude
resources throughout the rest of the world. A shift in U.S.
crude-supply preferences will simply cause redirection of crude
supplies elsewhere." (Page 4-5)
-- "This analysis of the change in crude-transport-related emissions
accompanying implementation of a LCFS indicates that the net effect
will be a doubling of GHG [greenhouse gas] emissions associated with
changes in crude-transport patterns. It indicates an increase in
global GHG emissions by 7.1 to 19.0 million metric tons per year,
depending on the extent of resulting Canadian crude displacement."
(Page 3)


Canada is currently the largest supplier of petroleum imported into the United States, but other nations are looking to the Canadian oil sands as a potential energy source. China alone has already invested more than $6 billion in Canadian oil sands projects as it continues to rapidly increase its presence in overseas energy production.

"By denying the American people access to oil from our friendly neighbor Canada, a low-carbon fuel standard would raise fuel costs and wipe out millions of American jobs," said NPRA President Charles T. Drevna. "Now this latest study shows that a nationwide LCFS won't reduce overall global greenhouse gas emissions - it will actually raise them. These findings simply reinforce NPRA's long-held belief that a federal low-carbon fuel standard is a policy of all pain and no gain."

Additional concerns regarding American access to Canadian oil sands resources have surfaced following a recent U.S. State Department decision regarding a proposed pipeline to transport Canadian crude to refineries in the Gulf Coast region. The decision will allow federal agencies an additional 90 days to comment on TransCanada's proposed Keystone XL project, pending the State Department's release of a final environmental impact statement. The proposed pipeline expansion would more than double the amount of Canadian crude imported to the United States.

Several regional and state LCFS initiatives are currently underway, including a statewide LCFS program in California established as part of the state's AB 32 climate law, and proponents of a federal LCFS continue to seek its enactment.

A federal LCFS provision was included in the 2008 Lieberman-Warner climate change bill that was defeated in the Senate. The 2009 Waxman-Markey climate change bill also contained an LCFS provision, although it was removed before the bill was passed by the House.

Two other recent studies cast additional doubt on the efficacy of low-carbon fuel standards:

-- A June 2010 report by Charles River Associates found that a nationwide
LCFS implemented in 2015 would result by 2025 in: the loss of between
2.3 million and 4.5 million American jobs; an increase of up to 170
percent in the price of gasoline and diesel fuel; and a 2 to 3 percent
decrease in the U.S. Gross Domestic Product (totaling between $410
billion and $750 billion).
-- A report by the Canadian Energy Research Institute issued in October
2009 examined the impacts of developing Canadian oil sands on the U.S.
economy. It found that such development - which would be threatened by
the implementation of a nationwide LCFS in the United States - would
result in an estimated 343,000 new U.S. jobs between 2011 and 2015,
and that U.S. output of goods and services would increase by an
average of $62 billion per year from 2009 through 2025.

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New Report Shows Significant Potential for Renewable Energy in South

The South could generate 20-30 percent of its electricity from renewable energy sources within the next 20 years – up from less than 4 percent today -- if strong federal policies are enacted, according to a report released July 27 by researchers at the Georgia Institute of Technology and Duke University. The analysis, “Renewable Energy in the South,” finds that conventional wisdom has underestimated the available renewable resources in the region and that a federal renewable electricity standard (RES) would enable the South to capitalize on this untapped renewable energy potential.

Read the Full Report Here: http://www.spp.gatech.edu/aboutus/workingpapers/renewable-energy-in-the-south

The South lags behind all other regions in renewable electricity, obtaining 3.7 percent of its power from renewable sources, compared to 9.5 percent for the country as a whole. Only four states (Delaware, Maryland, North Carolina, and Texas) have a state-level renewable portfolio standard, while three others have voluntary renewable energy goals.  The fate of renewables in the South is not only important for the region, but for the nation as a whole since, in 2008, the region accounted for 44 percent of the country’s energy consumption.

Opponents of renewable energy production claim that the South lacks the renewable energy resources to capitalize on the growing demand for clean energy.  However, the report finds that there are abundant renewable energy resources available that can be tapped if supportive policies are put in place. The report shows that if a 25 percent (by 2025) federal RES is enacted, the amount of electricity supplied by power companies from renewable sources could increase more than 250 percent above the level expected in 2030 if no new federal renewables policies were enacted.

A number of other studies have shown a large potential for renewable energy in the South,” said Etan Gumerman of Duke University’s Nicholas Institute and co-lead researcher of the study.  “Our study shows that significant increases can actually be achieved, particularly through supportive local or federal policies.”

The report, using a customized version of the economic modeling system used by the U.S. Energy Information Administration, finds that a federal renewable electricity standard and carbon pricing system would increase the proportion of electricity derived from renewable sources by power companies in every state, particularly in wind and biomass. By 2030, the report shows, federal carbon pricing policy would increase renewable electricity production in the South by 390 percent.

“Countries around the world are already tapping into the potential of renewable energy, and are capturing export markets and generating jobs in the process,” said Dr. Marilyn Brown of the Georgia Institute of Technology and co-lead researcher of the study.  “The report demonstrates that although many states in the South are off to a slow start, renewable initiatives are now underway across the region, and the potential for expansion is promising.” 

In addition, the report finds that electricity produced by end-users, such as households and businesses using small-scale solar electric and heating facilities, would also benefit from federal policies and could supply a substantial portion of the region’s renewable electricity.  Under a 25 percent RES, for example, renewable electricity supplied by utilities and end-users could increase by 154 percent. Carbon pricing policy could lead to a 266 percent increase above the total level of renewable electricity expected in the absence of federal policy changes.

“In the future, households and businesses have the potential to become major suppliers of clean, renewable electricity,” added Dr. Brown.  “This changes the way we need to think about the South’s renewable energy potential.”

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Coalition of Consumers Urges Senate Not to Legislate Natural Gas Demand in Energy/Climate Bill

/PRNewswire/ -- A coalition of major manufacturers, agricultural organizations and other industrial energy consumers today cautioned the Senate to avoid legislating new natural gas demand in any energy or climate change bill, saying such an approach would be "misguided" given existing strong demand growth and looming regulatory and political uncertainty surrounding access to major supply sources.

In a letter to Senate Majority Leader Harry Reid, 67 industrial and agriculture energy consumers -- representing farm and food concerns and makers of chemicals, fertilizer, glass, paper and steel -- expressed concern about artificially creating power and transportation sector demand for natural gas through legislative incentives. Doing so, they said, would cause the type of fuel switching that has ripple effects through the economy.

Paul Cicio, president of the Industrial Energy Consumers of America (IECA), said legislating new demand would prompt increased price volatility and higher prices. Higher natural gas prices also mean higher electricity costs.

"The impact will be felt by all consumers, not just industrial users," Cicio said. "Farmers will pay more for fertilizer, natural gas to dry their crops and electricity to run their irrigation systems; homeowners will pay more to heat and cool their homes; and manufacturers would be confronted with greater competitiveness challenges which threaten jobs at home."

The coalition said gas demand has been steadily rising in the past decade without the incentives being contemplated in the Senate and in the absence of carbon caps, which will increasingly shift more power generators from coal to natural gas. The power sector's natural gas demand has grown by nearly 30% since 2001.

"The economic recovery and our energy security will be better served if U.S. energy policy ensures American manufacturing can continue to compete globally and keep its jobs here," said Peter Molinaro, Dow Chemical's vice president of federal and state government affairs. "Our economy needs a diverse base of price-sensitive natural gas consumers -- and a diverse energy supply -- in order to reduce price volatility in all energy sectors."

The letter urges the Senate to allow the market to set supply and demand for natural gas instead of picking 'winners' and 'losers' through legislation.

The coalition acknowledged there is great hope that the large shale gas reserves will materialize as recoverable supplies. "However, history has shown that unforeseen circumstances, including the potential for both federal and state regulations to be placed on shale drilling, can either slow its production, increase its costs or otherwise dramatically alter these types of future projections."

The industrial and agriculture consumers called for a coherent energy policy that balances gas demand with the economy's need for affordable supplies.

Signatories to the letter include: American Forest &Paper Association, Dow Chemical Company, Kimberly-Clark Corporation, Land O' Lakes, Steel Manufacturers Association and The Fertilizer Institute.

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Atlanta Gas Light Files First Rate Case in Five Years

/PRNewswire/ -- Facing higher operating expenses and declining revenue in a stubborn economy, Atlanta Gas Light today filed an application with the Georgia Public Service Commission (PSC) requesting a monthly increase in base rates of $2.95 for residential customers.

In its first rate case filing in more than five years, Atlanta Gas Light attributes the primary need for the increase to higher compliance and operating costs, including employee expenses and declining customer growth. If granted, it would be the first base rate increase for Atlanta Gas Light since 1993. Revenues from base rates are what the utility uses to provide its core services. Even with the proposed increase, company forecasts indicate revenues collected from customers in 2010-2011 would be lower than the company received in 2005.

For the first time in company history, Atlanta Gas Light has lost more customers than it has added for two consecutive years. In 2009 alone, Atlanta Gas Light experienced a net loss of over 8,000 customers from the system. The impact of a slower rate of new customer additions and higher customer attrition means the fixed costs of the utility are spread over fewer customers, which contributes to the upward pressure on rates.

"Over the past five years, we have taken aggressive steps to control costs and manage our utility expenses," said Suzanne Sitherwood, president, Atlanta Gas Light. "This rate adjustment is necessary to maintain appropriate service levels, to invest in vital programs that will make us more efficient, and to improve our ability to meet our customer needs. We deferred this necessary step as long as we could."

A portion of the increase would support Atlanta Gas Light's ongoing five-year business plan presented in the application. Called "Customer First," the plan includes customer service initiatives such as:

-- Automated Meter Reading Technology, which will equip radio technology
to hundreds of thousands of meters and is expected to improve
efficiency and accuracy and provide real-time consumption data;

-- Re-establishing the Customer Call Center in Atlanta, bringing
approximately 74 jobs to Riverdale, Ga., to better handle customer
care;

-- Improved Technology Systems, intended to provide quicker response
times for marketer and customer services and improved web features for
customer scheduling and personal consumption statistics;

-- Service Call Courtesies and Repair/Replace Vouchers, enabling utility
technicians during service calls to perform minor repairs or leave
behind repair or replacement vouchers for ENERGY STAR appliances. This
program is expected to help avoid service interruption, improve safety
and retain customers on the natural gas system, which keeps costs down
for all ratepayers; and

-- Increased Service Availability, intended to improve response time and
shorten customer wait time for the company to complete orders.


Atlanta Gas Light has included a proposal expected to help hold down future operating expenses by adopting a policy to require the company to share 50 percent of the cost savings resulting from future acquisitions with Atlanta Gas Light customers through lower operating expenses. Two recent acquisitions in Virginia and New Jersey have produced more than $100 million in cost savings since 2005, benefiting residential and commercial Atlanta Gas Light customers.

"A formal policy requiring that Atlanta Gas Light customers receive fifty percent of the cost savings from future acquisitions is the right thing to do," said Hank Linginfelter, executive vice president, AGL Resources. "We have reduced overall corporate service expenses shouldered by Atlanta Gas Light's customers from 90 percent to 48 percent through our most recent transactions, and we are now able to provide shared corporate services at one of the lowest rates in the country among major gas utilities."

The company's rate proposal is expected to increase the average annual residential natural gas bill by about 3 percent. If granted, the new rates would be expected to generate about $54 million annually. The new revenue would support ongoing operations and reset the company's return on equity ($18.5 million), fund new customer service initiatives ($13.4 million), collect a portion of savings from mergers benefiting Atlanta Gas Light customers ($14.5 million), and restructure depreciation expenses ($7.7 million). The changes would go into effect in November 2010 and would be reflected in Atlanta Gas Light's base rate charge assessed to customers by their certificated gas marketer.

The PSC will hold public hearings on the company's application beginning in August and will evaluate the case under its legal obligation to balance the need for the consumer to receive reliable services at reasonable rates with the need to provide the utility with the opportunity to earn a reasonable return on its investment.

About Atlanta Gas Light

Atlanta Gas Light, a wholly owned subsidiary of AGL Resources (NYSE:AGL) , provides natural gas delivery service to more than 1.5 million customers in Georgia. In operation since 1856, the company is one of the oldest corporations in the state. For more information, visit www.atlantagaslight.com.

About AGL Resources

AGL Resources (NYSE:AGL) , an Atlanta-based energy services company, serves approximately 2.3 million customers in six states. The company also owns Houston-based Sequent Energy Management, an asset manager serving natural gas wholesale customers throughout North America. As an 85-percent owner in the SouthStar partnership, AGL Resources markets natural gas to consumers in Georgia under the Georgia Natural Gas brand. The company also owns and operates Jefferson Island Storage & Hub, a high-deliverability natural gas storage facility near the Henry Hub in Louisiana. For more information, visit www.aglresources.com.

Forward-Looking Statements

Certain expectations and projections regarding our future performance referenced in this press release are forward-looking statements. Forward - looking statements involve matters that are not historical facts and because these statements involve anticipated events or conditions, forward-looking statements often include words such as "anticipate," "assume," "believe," "can," "could," "estimate," "expect," "forecast," "future," "goal," "indicate," "intend," "may," "outlook," "plan," "potential," "predict," "project," "seek," "should," "target," "would," or similar expressions. Forward-looking statements in this press release include, without limitation, the expected revenues to be collected from Atlanta Gas Light customers in 2010-2011; including the underlying components , such as forecasted declining revenues, higher operating expenses and the sharing of cost savings from future acquisitions, driving the proposed higher base rates \, and the projected operational, customer and other benefits from the results of the "Customer First" five-year business plan and related initiatives; and future operating expenses related to future acquisitions.

Our expectations are not guarantees and are based on currently available competitive, financial and economic data along with our operating plans. While we believe our expectations are reasonable in view of the currently available information, our expectations are subject to future events, risks and uncertainties, and there are several factors - many beyond our control - that could cause results to differ significantly from our expectations.

Such events, risks and uncertainties include, but are not limited to, changes in price, supply and demand for natural gas and related products; the impact of changes in state and federal legislation and regulation including changes related to climate change; actions taken by government agencies on rates and other matters; utility and energy industry consolidation; the impact on cost and timeliness of construction projects by government and other approvals, development project delays, adequacy of supply of diversified vendors, and unexpected change in project costs, including the cost of funds to finance these projects; direct or indirect effects on our business, financial condition or liquidity resulting from a change in our credit ratings or the credit ratings of our counterparties or competitors; interest rate fluctuations; financial market conditions, including recent disruptions in the capital markets and lending environment and the current economic downturn; the impact of natural disasters such as hurricanes on the supply and price of natural gas; acts of war or terrorism; and other factors which are described in detail in our filings with the Securities and Exchange Commission, which we incorporate by reference in this press release. Forward-looking statements are only as of the date they are made, and we do not undertake to update these statements to reflect subsequent changes.

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Climate Change Legislation Will Increase Diesel Prices, Hurt Consumers

/PRNewswire/ -- The American Trucking Associations (ATA) First Vice Chair Barbara Windsor told the Senate Environment and Public Works Committee today that the current cap-and-trade proposal will increase the price and volatility of diesel fuel for the trucking industry without significantly reducing carbon emissions.

"ATA strongly supports efforts to reduce greenhouse gas emissions and make this country more energy independent," said Windsor, who is President and CEO of Hahn Transportation in New Market, Md. "However, an economy-wide cap and trade system is not the answer." Proponents of an economy-wide cap-and-trade system say increasing the price of fuel will reduce consumption, Windsor said, but that does not hold true in the trucking industry.

"In our industry, a higher fuel price does not translate into fewer miles traveled because the nation depends on trucks to deliver nearly 100 percent of the food, clothes, and medicines that we use in our daily lives," said Windsor. "Instead, this increase in diesel prices will raise logistics costs within the economy and hurt the American consumer."

Cap-and-trade requires oil refineries to purchase emission allowances that cover their direct refining operations and the amount of carbon produced by downstream combustion of the produced fuels. "The costs associated with obtaining these allowances will be passed on the fuel consumers in the form of higher prices," said Windsor. "A major petroleum supplier to the trucking industry has advised that diesel fuel costs could rise by up to 88 cents."

"Should Congress move forward with a cap-and-trade carbon control system, oil refinery carbon caps should apply only to the refinery's direct carbon emissions and not to the downstream combustion of the products they produce such as gasoline, diesel, and jet fuel," said Windsor.

Cap-and-trade also will increase price volatility as carbon prices will fluctuate. Volatile fuel prices make it very difficult for trucking companies to accurately predict expenses and pass them on to customers.

ATA is concerned with the support of various investment banks for cap-and-trade. These firms would profit from volatility in the energy futures markets and a carbon derivatives market. Congress must reform commodity trading before creating new derivative carbon markets.

Windsor's testimony suggested alternative methods of reducing carbon emissions from the trucking industry. These alternatives are set forth in ATA's environmental sustainability plan, which would reduce fuel consumption by 86 billion gallons and reduce the carbon footprint of all vehicles by nearly a billion tons over the next 10 years. The sustainability plan includes: a national 65 mph speed limit and governing new truck speeds to 65 mph or below; decreasing idling; reducing highway congestion through highway infrastructure improvements; increasing fuel efficiency through EPA's SmartWay Program; promoting the use of more productive truck combinations; and supporting national fuel economy standards for medium- and heavy-duty trucks.

"Our plan can achieve real results with far less cost and disruption to our industry sector than under a cap-and-trade scenario," said Windsor.

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