CalEnergy

Public discussions regarding a federal legislative response to global climate change have increased significantly in recent months, and congressional leadership has made climate change legislation a priority. It is likely the United States Congress will begin addressing climate-related legislation as early as this summer; many congressional observers expect to see the passage of climate change legislation within the next several years.

Important policy issues must be considered in the formulation of any approach to global climate change. Governors and regulators will play key roles in influencing and implementing laws passed by legislative bodies. In order to engage in informed decision making that considers all the impacts of potential legislative responses to global climate change, we believe it is critical that we have an open, ongoing dialogue with our regulators and other government officials to understand the impact these responses may have on electricity supply, reliability and cost to customers.

We welcome the debate on global climate change legislation in Congress and the states, but we are concerned that, in the rush to legislate, unintended consequences could result in a significant cost impact to consumers of electricity, create market imbalances and have a negative impact on the reliability of the nation’s electricity system. Poorly conceived greenhouse gas emissions reduction mandates could result in dramatic increases in natural gas prices, large construction cost overruns that result from the rush to deploy immature technologies and job losses resulting from the migration of energy-intensive industries to developing countries that have no similar greenhouse gas reduction requirements. Given the already stretched U.S. electric infrastructure, failure to consider and address these issues holistically could result in serious negative impacts on our consumers. We therefore look forward to working together to inform our lawmakers of the impacts and complexities of implementing a greenhouse gas reduction program.

Our goal is to cultivate informed decision making, not to slow the progress of global climate change legislation. MidAmerican is committed to addressing responsibly the issue of climate change and has been an industry leader in undertaking actions that reduce greenhouse gas emissions. We have been, and will continue to be, leaders in the use of renewable energy and in reducing our carbon intensity per megawatt-hour. We have been able to create such positive outcomes by focusing on reduction efforts that make business sense and benefit customers by implementing currently available, proven technologies in cooperation with our various regulators and customers. We also participate in research efforts to promote the development and deployment of new technologies, including advanced coal utilization technologies and emission controls and in regional partnerships that explore carbon capture and storage.

MidAmerican believes our nation’s response to global climate change must include the following principles in order to be effective and affordable:

		Global climate change solutions should be designed to encourage greater deployment of cost-effective energy efficiency programs and economically feasible renewable energy production. They should also provide adequate funding for research, development and deployment of a broad spectrum of innovative technologies targeting low or zero carbon emissions and carbon sequestration at reasonable costs.

		A time frame for implementation of greenhouse gas emission reductions must take into account technology availability, reliability and economic feasibility in order to avoid unacceptable impacts on residential consumers and small businesses.

		A greenhouse gas reduction program should be phased in over a reasonable period of time to provide a balanced and effective transition for the electricity sector. Flexible interim benchmarks must be developed to ensure progress and to accommodate developments in scientific knowledge and accelerated technology opportunities.

		Climate change is a global phenomenon that requires comprehensive, long-term and worldwide responses that address all greenhouse gas sources in all economic sectors.

		A U.S. greenhouse gas emissions reduction program will only be effective if it is part of an international approach that includes all major emitting sectors in both developed and developing countries. Therefore, the U.S. government should ensure that any international greenhouse gas emissions control regime emerging after the first commitment period of the Kyoto Protocol in 2012 is compatible with U.S. federal legislation and regulations. This should include self-implementing “off ramps” if major developed and developing countries fail to participate in such an international regime.

		Given the enormous transitional effects a greenhouse gas reduction program will have on the electricity sector, regulated utilities should be authorized to recover all costs necessary to achieve the greenhouse gas emission reduction levels mandated by federal and state governments.

		Global climate change solutions should protect a secure, economic and diverse supply of energy for the United States by encouraging investments that maintain adequate reserve margins, support economic growth and meet customers’ needs for affordable and reliable energy.

There is little doubt that the United States, through its enormous technological skill base and with the support of the world’s leading economy, can meet this challenge and maintain prosperity for future generations. However, failure to recognize the complexities and the economic and technical short-term realities of this challenge could seriously harm the customers for whom we share a responsibility of ensuring cost-effective and reliable service.

We must work together to inform our legislators of these concerns and our willingness to help them find cost-effective solutions for customers. This will be a top priority of our company during the next several years, and we urge your participation in this ongoing discussion, as all of us will be involved with implementing the results of any global climate change legislation.