How State Power Regulators Are Making Utilities Account For The Costs Of Climate Change

How State Power Regulators Are Making Utilities Account For The Costs Of Climate Change New Mexico Gov. Michelle Lujan Grisham has ordered state agencies to reduce greenhouse gas emissions. AP Photo/Morgan Lee

The electricity powering your computer or smartphone that makes it possible for you to read this article could come from one of several sources. It’s probably generated by burning natural gas or coal or from operating a nuclear reactor, unless it’s derived from hydropower or wind or solar energy. Who gets to choose?

In many states, it’s up to the utilities, the companies that bill you for electricity. Costs often weigh heavily in their decisions. But deciding which costs to consider is a very subjective process.

If your utility accounts for the toll taken by climate change, like Xcel Energy in Colorado does, your state electricity regulator probably makes the company do that. This approach is one behind-the-scenes way that a growing number of states are addressing global warming.

As scholars who study the intersection between policies that deal with climate change and energy, we have studied the rules that govern electric utilities across the nation. Our new report sheds light on where state regulators have the ability to make rules that mandate action on climate change.

States, electricity and climate change

Every additional ton of the greenhouse gas emissions from burning fossil fuels to generate electricity contributes to climate change. This carbon pollution has many negative consequences, both to the physical world and also to global social and economic systems.

But utilities don’t always tally the costs of these consequences. Because dealing with climate change is astronomically expensive, we believe that this should change.

Utilities still largely rely on coal, natural gas and nuclear energy to keep the lights on. These companies rely on older technologies in part because those facilities are already built and, to a degree, because of how much it costs to start up and shut down power plants. What’s more, fossil fuels have generally been cheaper than other energy sources until somewhat recently.

But when state regulators require utilities to factor in the effects from burning fossil fuels, a big investment to get a large-scale wind or solar operation up and running becomes a better bargain. And since making electricity from cleaner energy sources has been steadily getting cheaper, factoring in climate costs could help speed up the process of phasing out climate-altering fossil fuels.

Different ways to do it

Some utilities are voluntarily including a line item in their balance sheets that estimates what their impact on the climate will be in monetary terms. Others are going this route due to the growing number of state electricity regulators that make it mandatory. We have determined that 10 states now account for climate costs in some way by regulating power companies.

Other states are starting to make bold proposals to reduce their emissions too.

A number of newly elected governors are making climate change a centerpiece of state policy in places where it had been an afterthought.

Some of these proposals focus on limiting carbon pollution to a certain level, others on increasing the generation of wind, solar and hydroelectric power, and others on making buildings and appliances more energy-efficient. All of these policies can be effective in reducing greenhouse gas emissions. But there are plenty of states in which a command-and-control policy where a regulator basically makes industries do a certain thing – like banning climate-warming chemicals used in refrigerators and air conditioners – might be unpopular.

There are also market-based options, where regulators encourage companies to do certain things without outright requiring them. In the U.S., this is mainly through the carbon-trading programs underway in places like California and the East Coast states that belong to the Regional Greenhouse Gas Initiative.

Americans in general support a shift toward more renewable energy, and energy regulation increasingly reflects that sentiment. Even in many of the so-called “purple states” like Nevada and Colorado, where leadership is divided between Democrats and Republicans, utility companies must tell the public how much their fossil-fuel pollution will cost because electricity regulators require it.

Who makes the rules?

Electric utilities, like ConEd if you live in New York, or PacifiCorp if you’re in California, Washington State, Utah, and other western states, have to follow a set of rules. These rules are created on a state-by-state basis by regulators, who are usually members of public utilities commissions. And because individual states are making these policy decisions, what each state chooses to do matters.

These regulators get their marching orders in multiple ways. State legislatures may pass laws that must be carried out by the commissions. Governors may ask them to make policy directly, through executive orders. Sometimes regulators end up making decisions in one proceeding that then change the rules across the board.

This avenue really depends on what the commissions are allowed to do in the first place, which is either set out in a law or set of laws – many states have whole sections of public utilities codes – or in the state constitution. Some regulators have a lot of freedom and autonomy, others not so much. In some cases, public utilities commissions are coming up with policies that reduce carbon pollution without any other statewide climate plan.

How State Power Regulators Are Making Utilities Account For The Costs Of Climate Change All of the new utility-scale electricity capacity coming online in the U.S. in 2019 will be generated through natural gas, wind and solar power, as coal, nuclear and some gas plants close. U.S. Energy Information Administration

New approaches

A growing number of states have established policies that make power companies account for the costs of climate effects caused by pollution they create. The list spans the nation, from New York to California and Washington state, plus many places in between.

In Colorado and Nevada, utilities must estimate how much carbon pollution their electricity generation produces, and include this information in the plans they submit to state regulators. The Minnesota Public Utilities Commission does something similar. Other examples of states accounting for climate change behind the scenes, can be found on our Cost of Carbon Project website.

In these states, regulators have ordered utilities to estimate the harm caused by their greenhouse gas emissions when deciding between which sources to use.

The electricity business is changing rapidly. We get that state regulators might not matter so much once market forces make solar and wind not just a better deal than coal but also more affordable than natural gas.

In the meantime, while the economy transitions to the point where it no longer generates greenhouse gas pollution, we believe that state utility regulators can make a big difference.The Conversation

About The Author

Iliana Paul, Policy Analyst, Institute for Policy Integrity, New York University and Denise Grab, Western Regional Director, Institute for Policy Integrity, New York University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Related Books

enafarzh-CNzh-TWnltlfrdehiiditjakomsfaptruesswsvthtrurvi

POLITICS

China Is Positioned To Lead On Climate Change As The US Rolls Back Its Policies
China Is Positioned To Lead On Climate Change As The US Rolls Back Its Policies
by Kelly Sims Gallagher and Fang Zhang
As the effects of climate change become more widespread and alarming, U.N. Secretary-General António Guterres has…
We Are Striking to Disrupt the System: An Hour with 16-Year-Old Climate Activist Greta Thunberg
by Democracy Now!
In her first extended broadcast interview in the United States, we spend the hour with Greta Thunberg, the 16-year-old…
Why Companies Should Let Their Workers Join The Climate Strike
Why Companies Should Let Their Workers Join The Climate Strike
by Ian McGregor
Multinational ice cream company Ben & Jerry’s will close its Australian stores for this month’s global climate strike…
Investing Billions in New Projects, Fossil Fuel Corporations Are Undermining World's Climate Targets
Investing Billions in New Projects, Fossil Fuel Corporations Are Undermining World's Climate Targets
by Julia Conley
These dirty fossil fuel companies are not getting the message, let alone acting on the urgency of the climate crisis.
Environmental Storytelling Can Help Spread Big Ideas For Saving The Planet
Environmental Storytelling Can Help Spread Big Ideas For Saving The Planet
by Denise Baden
Tackling climate change will require huge changes in society. Decarbonising energy, restoring habitat and making food…
How Many Americans Believe In Climate Change?
How Many Americans Believe In Climate Change?
by Matthew Houser
Indiana certainly doesn’t look like a state that’s ready to confront climate change. Its former governor, Vice…
How Indigenous Peoples' Lives Are Being Destroyed By Global Agribusiness In Brazil
How Indigenous Peoples' Lives Are Being Destroyed By Global Agribusiness In Brazil
by Francesca Fois and Silvio Marcio Montenegro Machado
For more than half a century, the indigenous Kaiowá and Guarani people of Brazil have been deprived of their ancestral…
Canadians In Every Riding Support Climate Action
Canadians In Every Riding Support Climate Action
by Matto Mildenberger and Erick Lachapelle
Canada is gearing up for a big election this fall and climate policy will likely be at the centre of debate.

LATEST VIDEOS

Bill Nye And The Climate Crisis
by MSNBC
On a special show before a live studio audience, Bill Nye the science guy discusses the climate crisis with Chris Hayes.
How Greenland's Massive Ice Melt Will Totally Transform The World
by Channel 4 News
Remember that heatwave back in August? Well, the Arctic remembers it too. Record rates of ice melt have been recorded…
China Is Positioned To Lead On Climate Change As The US Rolls Back Its Policies
China Is Positioned To Lead On Climate Change As The US Rolls Back Its Policies
by Kelly Sims Gallagher and Fang Zhang
As the effects of climate change become more widespread and alarming, U.N. Secretary-General António Guterres has…
What Happens When The Permafrost Thaws?
by Official W5
Almost half of Canada sits on permanently frozen land called permafrost, but climate change is causing it to thaw and…
We Are Striking to Disrupt the System: An Hour with 16-Year-Old Climate Activist Greta Thunberg
by Democracy Now!
In her first extended broadcast interview in the United States, we spend the hour with Greta Thunberg, the 16-year-old…
Annual Assessment of North Cascades Glaciers Finds Shocking Loss of Volume
Annual Assessment of North Cascades Glaciers Finds Shocking Loss of Volume
by Mauri Pelto
The summer of 2019 found the North Cascade Glacier Climate Project in the field for the 36th consecutive summer…
Breakdown In Coral Reef Iconic Spawning Puts Species At Risk Of Extinction
Breakdown In Coral Reef Iconic Spawning Puts Species At Risk Of Extinction
by Heidi Burdett
Breakdown In Coral Reef Iconic Spawning Puts Species At Risk Of Extinction
How Climate Change Is Driving Emigration From Central America
How Climate Change Is Driving Emigration From Central America
by Miranda Cady Hallett
Clouds of dust rose behind the wheels of the pickup truck as we hurtled over the back road in Palo Verde, El Salvador.

LATEST ARTICLES

How Climate Change Could Threaten The World’s Traditional Food Dishes
How Climate Change Could Threaten The World’s Traditional Food Dishes
by Daisy Dunne
Climate change is likely to alter the way that the world grows, trades and enjoys food.
Bill Nye And The Climate Crisis
by MSNBC
On a special show before a live studio audience, Bill Nye the science guy discusses the climate crisis with Chris Hayes.
How Greenland's Massive Ice Melt Will Totally Transform The World
by Channel 4 News
Remember that heatwave back in August? Well, the Arctic remembers it too. Record rates of ice melt have been recorded…
China Is Positioned To Lead On Climate Change As The US Rolls Back Its Policies
China Is Positioned To Lead On Climate Change As The US Rolls Back Its Policies
by Kelly Sims Gallagher and Fang Zhang
As the effects of climate change become more widespread and alarming, U.N. Secretary-General António Guterres has…
We Need More Carbon In Our Soil To Help Australian Farmers Through The Drought
We Need More Carbon In Our Soil To Help Australian Farmers Through The Drought
by Nanthi Bolan
Australia has never been a stranger to droughts, but climate change is now super-charging them.
Climate Breakdown Is Pushing Brazil's Iconic Araucaria Tree To Extinction
Climate Breakdown Is Pushing Brazil's Iconic Araucaria Tree To Extinction
by Oliver Wilson
For hundreds of thousands of years, the distinctive candelabra shapes of Araucaria trees (Araucaria angustifolia) have…
Roiled By Trump Politics, NOAA Seeks Accountability, Atonement
by MSNBC
Rachel Maddow reports on the backlash within the weather science community over an unsigned statement from NOAA…
Extreme Cities: Ground Zero for Climate Change
by The Laura Flanders Show
No matter how we tackle climate change, cities are key.