Weighing the costs of cap-and-trade in rural America

Over at the Daily Yonder, former Iowa Independent fellow Douglas Burns has an interesting look at President Barack Obama’s cap-and-trade plan to reduce greenhouse gas emissions and the disproportionate affect it could have on rural America’s utility companies.

Because many rural residents get their power through small utilities or cooperatives, which have fewer customers per mile of line, they could see rate increases if the plan is put in place. The smaller companies “can’t spread out costs as widely as investor-owned utilities,” Burns writes.

BusinessWeek reports that gasoline would go up 12 cents a gallon and electricity 7 percent nationally under cap-and-trade. [Glenn] English, with the National Rural Electric Coop Association, says the electrical rate hike will be closer to 15 percent – and Iowa’s [Bruce] Bailey thinks that may be far too low of an estimate. In an op-ed piece he sent to Iowa media, Bailey is warning customers that cap-and-trade could double or triple their rates between implementation and 2050.

Burns points out, however, that not everyone agrees with this dire assessment for rural Americans. Aaron Wiener, writing for our sister site The Washington Independent, said Obama’s plan calls for 80 percent of the revenue generated by selling carbon allowances to be given back to the public through a tax credit of $400 for individuals or $800 for families. That would actually end up saving many rural people money.