Carbon trading program in the Southwest raises questions about renewal energy financing

Environmental groups are pushing power companies and tribes in the Southwest to go green. Native American environmental activists want to use pollution credits from a closed dirty power plant in western Arizona, to invest in renewable power. But some groups are critical of pollution trading as the best approach to financing renewable energy.  FSRN’s Christina Aanestad files this report:

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Located near the border of California and Arizona, Nevada's Mojave Generating Station was one of the Southwest's dirtiest coal-fired power plants, spewing an estimated 42,000 tons of sulphur dioxide a year. The plant used tons of coal and more than a billion gallons of water annually from the Navajo and Hopi Nations to provide power to Southern California and Nevada.

Tony Skrelunas is a Navajo from Big Mountain, and he works for the environmental group the Grand Canyon National Trust:

"A tribal colony way far away from California has allowed California to flourish by using cheap water, cheap coal for this power plant. Now it's time for California rate payers to realize how much we've helped California, and now it's time to reciprocate."

The Mojave Generating Station shut down in 2005, due to Clean Air Act violations. Because the dirty power plant stopped operating, parent company SoCal Edison earns more than $30 million worth of pollution credits annually. Other dirty power plants can buy those credits to continue operating. Environmental groups want the proceeds of those sales invested in alternative energy. It's called the "Just Transition" plan.

"It's making a transition from dirty to clean energy."

Roger Clark is the executive director of the Grand Canyon Trust.

"It basically would set aside a certain amount of money from the sale of the sulphur credits, and that money could only be spent as part of the financing package of renewable energy projects that would have some benefit for Navajo and Hopi people."

The Grand Canyon Trust, along with the Sierra Club, the Black Mesa Water Coalition, and other indigenous environmental groups, formed a coalition and made the request to California's utility regulator, the C.P.U.C. The C.P.U.C. placed So Cal Edison's sulphur credits into a trust fund until the agency makes a ruling. But some advocacy groups oppose the plan, including TURN, the utility reform network. TURN legal director Bob Finkelstein says renewable energy shouldn't be financed with pollution credits:

"The notion of credit is-Edison could sell them to some other coal-fired generation plant, and as a result of that, the coal-fired generation plant could continue polluting rather than buying equipment to cut back on its pollution. The plant would just buy a credit and buy its right to pollute a little more."

Instead of trading the pollution credits to a dirty power plant, TURN wants SoCal Edison to retire them.

"If you retire the credits, the utility will get a tax benefit-you end up with two-thirds of the dollars to fund good projects like the ones the Just Transition Coalition has been advocating for. But, you do it in a way that you're not effectively selling pollution rights to other plants. You are doing it in a way that also reduces the ultimate amount of pollution that's gonna be out there."

TURN filed its own legal brief with the C.P.U.C., urging the regulator to retire the sulphur dioxide credits. SoCal Edison also filed a legal brief opposing both proposals. A spokesperson for SoCal Edison declined to comment on the pending litigation. But in the legal brief filed with the C.P.U.C., the company argues that the commission lacks the authority to regulate what power companies do with their own pollution credits. Instead, SoCal Edison argues that the money should go back to rate-payers. Again, Clark, with Grand Canyon Trust:

"It's many-thousandth-a-cent per kilowatt hour is what it would mean for the average rate payer."

Some, including TURN's Finkelstein, say, in the long run, investing pollution credits in renewable energy will benefit rate payers more, and benefit Native American tribes in the Southwest. So far, the C.P.U.C. has not made a ruling whether SoCal Edison will have to use its sulphur dioxide credits to invest in renewable power on the Navajo and Hopi reservations.

A commission judge is scheduled to deliver a proposed ruling any day.

Christina Aanestad, FSRN.