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Wednesday, May 27, 2009

EJ Needed in House Energy CO2 Allowance Allocation

AAEA is recommending a fifth item to the four consumer protection provisions in the climate bill that just passed out of the House Energy & Commerce Committee [See Green text below]. Half of the aid (7.5%) for low, moderate-income families could go to protect communities from environmental injustice.

1) Protection from Electricity Price Increases: The electricity sector will receive 35% of the allowances, representing 90% of current utility emissions. Local electric distribution companies, whose rates are regulated by the states, will receive 30% of the allowances, which they must use to protect consumers from electricity price increases. Merchant coal and long-term power purchase agreements will receive 5% of the allowances. These allowances will be distributed according to a formula recommended by the utility industry and will phase out over a five-year period from 2026 through 2030.

2) Protection from Natural Gas Price Increases: Local natural gas distribution companies, whose rates are regulated by the states, will receive 9% of allowances, which they must use to protect consumers from natural gas price increases. These allowances will phase out over a five-year period from 2026 through 2030.

3) Protection from Home Heating Oil Price Increases: States will receive 1.5% of allowances for programs to benefit users of home heating oil and propane. These allowances will phase out over a five-year period from 2026 through 2030.

4) Protection of Low- and Moderate-Income Households: 15% of allowances will be auctioned each year and the proceeds of these allowances will be distributed to low- and moderate-income families to protect them from other energy cost increases. These allowances will be distributed through tax credits, direct payments, and electronic benefit payments and will not phase out.

Full House Energy & Commerce Committee Allowance Allocation Proposal
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5) Environmental Justice Allowance Reserve (EJAR) to address the racial 'Hot Spots' issue. These allowances would come from a special reserve, similar to the current Acid Rain Program Renewable Energy and Conservation Reserve, when the initial allowance allocation is made. They would be awarded to utilities and others that undertake environmental justice practices and programs designed to mitigate local pollution, increase the installation of pollution control equipment, promote community education and enhance health-related activities. [Full Description]

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