- The Washington Times - Wednesday, September 9, 2009

ANALYSIS/OPINION:

A recent article about generator profits under proposed “cap-and-trade” legislation took too narrow a view (“Nuclear power plants face big profits in House bill,” Page 1, Sept. 1). We should be looking not at profits but at price signals from well-functioning markets that in the long run will provide consumers with least-cost outcomes and innovation that no government regulatory program can provide.

If consumers are going to reduce electricity use and buy electricity from low-carbon energy suppliers, they will be guided by clear price signals in competitive markets. Government-protected monopolies stifle innovation and the transparent price signals that provide accurate real-time information, which allows generators and consumers to make decisions about reducing emissions and improving efficiency, as intended under a market-based cap-and-trade program.

Furthermore, the study referenced in the story is deeply flawed because it fails to account for investment in low-carbon energy sources that a market-based cap-and-trade program would encourage. The report’s flawed assumptions prompted criticism not only from power providers but also from state utility regulators in Texas and Pennsylvania.

We already have seen competitive markets realizing the outcomes that a federal cap-and-trade program is designed to bring about, predominantly renewable energy development and increased efficiency in the production and use of electricity. By focusing on generator profits instead of price signals, The Washington Times missed the forest for the trees.

JOEL MALINA

Executive director

Compete Coalition

Washington

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