Exelon CEO Seeks Profits From Climate Regulations
NLPC has piled pixels in reporting the crony capitalism and gaming of government regulations by Duke Energy CEO James Rogers, who has favored a political engagement approach to the conduct of business rather than the delivery of services to consumers at affordable prices. That’s how the electricity business works: when you have monopoly control and are guaranteed a profit by your regulators, then you don’t have to worry about besting your competition to earn your customers.
No less passionate an advocate for regulatory favoritism – especially in support of greenhouse gas regulations such as cap-and-tax and carbon (dioxide) taxes – is Exelon Corporation CEO John Rowe. While not as big a supporter of Democrats as Rogers, Rowe – like your typical corporate honcho – has thrown money to both Democrats and Republicans, most which have supported his GHG-restrictive policy beliefs.
Over the weekend National Journal published an interview with Rowe, in which the head of the Midwestern utility revealed how Chicago-based Exelon – whose shareholders just approved a merger with Constellation Energy – makes money on the GHG regulations, but also is frank about how the “solutions” proposed by global warming alarmist groups are unrealistic.
“The electricity industry is probably the only place where I could be a liberal,” Rowe told National Journal. “I’m fundamentally very conservative in my economic views. And I never met a big power plant that I didn’t like.”
Why would Rowe want the image of him conjured in peoples’ minds of his alleged conservatism juxtaposed with “big power plants,” i.e., with “big smokestacks,” i.e. “big pollution?” After all, Republicans for Environmental Protection – the GOPers that are actually his type – honored Exelon and Rowe this summer for exemplary “environmental leadership,” a distinction he readily embraced. The accolades were bestowed because “Exelon is demonstrating that reducing harmful emissions is an integral part of a broader, market-driven strategy that will diversify our country's energy choices, reduce costs, and foster economic growth through investments in advanced energy technologies,” according to REP.
Unfortunately Rowe is unable to reconcile his belief in GHG reductions with the fiscal conservatism he says he espouses, since electricity rates “must necessarily skyrocket” under any carbon dioxide taxation plan, whether a direct levy or cap-and-tax. The reason he can, in good corporate conscience, advocate for GHG curbs is because Exelon – with the largest nuclear power generation fleet in the nation – would benefit, because nukes emit no CO2.
“If the EPA regulations are enforced, the oldest coal plants are likely to go,” Rowe told National Journal, “and they’ll mostly be replaced by natural gas, which has about half the carbon content. So you get a climate pickup. And, finally, we make some money, because our power prices go up. We don’t hide that.”
Rowe also told American Enterprise Institute in a March speech that he supported cap-and-tax because “the science of climate change is real” and because “it offered my company a way to improve its earnings and profit from its cleaner power.” Exelon has thrown considerable money into its lobbying efforts, averaging over $4 million in expenditures over the last five years, according to the Center for Responsive Politics.
Exelon is in the U.S. Climate Action Partnership with Duke Energy and others, and they speak the same language about the financial benefit from climate regulations. Last month Duke’s Rogers, when asked by author Robert Bryce why he was investing so much in wind energy (solar also) projects, he explained that subsidies for wind projects allow Duke to earn returns on equity of 17 to 22 percent. Those subsidies are driven by an overall policy to reduce GHGs.
While both Rowe and Rogers desire cap-and-tax legislation from Washington, Exelon has bet on nuclear while Duke seems to be buying all the wind and solar facilities it can find. In 2008 Rowe announced Exelon would “reduce, offset or displace” its entire carbon (dioxide) footprint by 2020. While that would appear attainable only under a 100 percent nuclear fleet or with a heavy dose of accounting gimmickry, Rowe at least added a pinch of realism about so-called “renewables” to the energy debate, as Rogers angled for the money grab.
“The problem is not that renewables are wrong,” Rowe said, answering a question from National Journal about the Obama administration’s “massive bet on clean energy.” “The problem is that they get this air of being a holy grail, and people believe they’re cheaper than they are and will provide more jobs than they do.”
In his AEI speech Rowe, to his credit, denounced federal energy policy “driven by a mess of mandates” and subsidies for nuclear, cleaner coal, gas, wind, solar and other renewable schemes, which he called “a constant urge to pick winners and losers.” He advocated for Congress to “do nothing” and allow for the exploration and development of the vast natural gas resources that have been discovered and accessed all over the U.S., because gas is the least polluting fossil fuel.
Rowe holds on to a fantasy that the climate change issue still carries policy significance in Washington, yet he’s a realist about the motivations and inefficiencies of government.
“They’ll just keep doing more expensive things through their renewable standards and other things instead of doing it the cheap way,” he told National Journal. “One of the things that might change that is this desperate need for federal revenue. I think it’s at least possible that in a five-year period—I don’t think it’s possible in a two- or three-year period—that the combination of evidence on climate change and the need for federal revenue will make some sort of modest carbon tax a possibility.”
So who does he think are the political horses to carry forward his seemingly impossible policy prescriptions? According to the Center for Responsive Politics, other than the obligatory corporate-minded donations he has made to political leadership and both 2008 presidential nominees (Barack Obama and John McCain), and incumbents from both parties that represent Illinois, Rowe has given thousands of dollars to many Republicans considered moderate such as Sen. Lindsey Graham of South Carolina and former Sen. Arlen Specter of Pennsylvania, who became a Democrat in his final candidacy. Rowe clearly thinks the GOP is more likely to advance his nuclear policies, having given far more to the party’s congressional and senatorial committees than to the Democrats.’ As for the 2012 presidential campaign, he has given $2,500 each to President Obama, Mitt Romney and Jon Huntsman.
“I’m a fiscal conservative/social moderate,” Rowe told National Journal. “Those people don’t have parties.
“It should be obvious from how I describe myself that just on ideology, I fall more naturally toward the Romney/Huntsman area than I do toward the president or toward [Newt] Gingrich.”
On climate change, Romney, Huntsman and Gingrich have all been on the side of alarmism at one time or another. Which shows that when it comes to smaller government, less taxation, free markets and politicians picking winners and losers – in energy policy – the safe harbors are few.
Paul Chesser is an associate fellow for the National Legal and Policy Center.