Grand Marais Public Utilities Commission (PUC) Board Member George Wilkes asked fellow PUC commissioners to consider passing a resolution of support for a federal revenue neutral carbon pricing policy known as “carbon fee and dividend.”
Wilkes called for this action at the PUC meeting held Wednesday, February 3, 2016.
In an email sent to the board on January 28, Wilkes laid out his reasons for the request.
“I realize that climate change and carbon pricing are politically charged issues and that the PUC would need to have a compelling reason to take a position,” Wilkes said. “Climate change is an issue that warrants such action because of its potentially catastrophic effects on the future well-being of the PUC and our customers. As informed representatives of PUC customers, we have an obligation to consider and address the extraordinarily dangerous impacts of the coal-fired electricity that we are selling and to provide leadership by identifying and endorsing a solution.”
A carbon fee on fossil fuels like coal, oil, natural gas would start small and increase steadily over a 20-year period. According to Wilkes, the money collected would be returned in its entirety to citizens as a rebate or dividend. Cost of living would increase modestly because of increasing fossil fuel prices but the dividend would offset those costs for a majority of Americans.
“The effects,” said Wilkes, “would be a market-driven decrease in fossil fuel use and associated CO2 emissions, and an increase in energy efficiency and low-carbon energy development.
“The fee is not a tax because the government doesn’t keep the money. It is essentially a break-even cost-shift, gradually making carbon-intensive goods and services more expensive and low-carbon goods and services less expensive,” explained Wilkes.
Citizens Climate Lobby (CCL), a non-partisan, grassroots, environmental group, has prepared legislation for “carbon fee and dividend.” More information about the carbon fee and dividend proposal can be found on the Citizen’s Climate Lobby website: www.citizensclimatelobby.org.
Rebecca Wiinanen, leader of the Cook County CCL chapter, was in attendance at the PUC meeting and voiced support for the resolution and potential legislation.
Staci Drouillard, coordinator of the Cook County Local Energy Project (CCLEP) was also at the meeting and said the Grand Marais Energy Plan includes a survey that shows public concern about climate change and support for renewable energy.
“Such a resolution of support would not be a futile act,” said Wilkes. “As leaders of a municipal utility our collective voices, especially when joined by others, will be heard by our U.S. congressional delegation, and would be beneficial in the effort to solve the climate change crisis.”
By not taking action, by staying with the status quo, said Wilkes, there would be ramifications.
“The problem is that we are subjecting our community to enormous long-term risk through climate change. We continue to do this in large part because the true costs of CO2 emissions are not included in the price of fossil fuel energy. The solution is to place a price on carbon.
“And finally, because of its market based and revenue neutral nature, the carbon fee and dividend is a climate change solution that can bring together the widest range of supporters from within the community.”
Wilkes said the current “carbon free and dividend” concept is receiving some support from conservatives because it is revenue neutral and market based.
Both PUC Board Members Tim Kennedy and Karl Hansen agreed they would like to hear from the public before making a decision to pass or not pass the climate change resolution, and they will seek out opinions. The board agreed to bring the topic back for discussion at their next meeting.
A look at solar rates
In other matters, Grand Marais City Administrator Mike Roth presented three alternatives on how the city could offer customers a chance to participate in a solar garden or community solar project. Roth had been asked to prepare the pro-forma by the board after they heard a presentation from George Wilkes about a community solar project in Moorhead, Minnesota.
Wilkes pointed out that the main reason for looking at a project like this was to allow individuals and business to invest in local solar power even though they don’t have property suitable for a solar installation.
In Roth’s solar scenario, the city started with 50 solar panels with each panel costing $1,007.50. In the first example each panel would be incentivized at $500, with the customer paying $507.00. The customer would receive a 3.74 percent rate of return on their investment with the payback period taking 14 years.
In the second offering, each panel would be incentivized at $300, with the customer paying $707.50. Customers would get .14 percent rate of return on their investment, which would take 19 years to receive payback.
Scenario 3 would incentivize each panel at $76.50 with the customer paying $931. The customer’s rate of return would be (a negative) -2.46 percent, and the customer would subsidize the panel for as long as he or she owned it.
Roth worked with Wilkes to prepare the pro forma analysis for a potential community solar project. Roth said the spreadsheet presented at the meeting “allows us to modify the construction costs, size, subsidy, return, and other features of the project.”
Wilkes said there were three strong reasons to consider building a solar garden. The first is because it would reduce CO2 emissions. The second is that it would provide an opportunity to become familiar with an important, rapidly emerging, carbon-free energy source and the third is that it would, “support a local energy industry.”
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