Bill to Benefit Nuclear, Clean-Power Utilities

By REBECCA SMITH

The Waxman-Markey bill will produce winners and losers in the utility sector.
Companies such as Exelon Corp., which provides utility services to about 12 million people in and around Chicago and Philadelphia, could do well. The company sold most of its coal-fired power plants in 2000 and owns a fleet of 17 nuclear power reactors in the Midwest and Mid-Atlantic. Exelon's generation unit won't need to buy credits to generate electricity, which could give it an edge.
Power companies in the Southeast could have the roughest transition, because they rely heavily on coal and have invested the least in renewable energy and energy efficiency.
The Waxman-Markey bill would give power companies time to make adjustments so consumers don't get hit with higher rates tied to the cost of buying emissions credits.
Bloomberg News
Winners in the carbon economy will include clean-power generators. Above, Edison Mission Group windmills outside Spanish Fork, Utah.
Under a deal brokered by House Energy and Commerce Committee Chairman Henry Waxman and a group of Southern and Midwestern Democrats, approximately 30% of the emission allowances created under the cap and trade system would be free to utilities that distribute power to customers. That should enable them to sell allowances to emitters that need them and use the proceeds to defray the cost of obtaining cleaner energy. Free allowances would disappear by 2030.
One major provision of the bill will require utilities to obtain a chunk of their electricity from renewable sources -- 6% by 2012 and 20% by 2020. Utilities could claim credit for energy efficiency to offset part of that requirement.
From a regulatory standpoint, the challenge will be proving that utilities really have achieved the necessary energy reductions. It's harder to prove energy savings than it is to account for power generated by wind turbines or solar arrays.
Silicon Valley venture-capital investors hope the bill will fuel use of green energy technologies developed by "cleantech" start-ups. Many such companies have been struggling amid the drop in energy prices.
Warren Weiss, a venture capitalist at Foundation Capital in Menlo Park, Calif., says some of his firm's cleantech companies have already seen "a tremendous uptick" in sales and buzz. At the consuming end of the grid, appliance maker Whirlpool Corp. is looking at provisions that would provide bonus payments to retailers selling products ranking in the top 10% in terms of energy efficiency.
It is already researching products such as a clothes drier that can respond to "smart grids" -- encouraged by the bill -- and curtail energy use in peak periods without wrinkling clothes.
Write to Rebecca Smith at rebecca.smith@wsj.com