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Global Climate Change

As Congress continues its debate over climate change legislation, we can expect continued public debate over how a cap-and-trade program should work, the bill's economic impact and who will shoulder the costs. As a state that relies heavily on coal-fired electric generation, Indiana will be central to these discussions. Indiana can and must take an active role in shaping legislation that is fair and achievable for everyone or risk devastating economic consequences, both to consumers and to the manufacturing sector that is so important to our state's economic health.

Poorly constructed climate change legislation, such as The Waxman-Markey American Clean Energy & Security Act passed in June by the U.S. House of Representatives, and Kerry-Boxer draft legislation moving through the U.S. Senate, would unfairly affect Indiana energy consumers, particularly those in northwestern Indiana. Early national and regional estimates show electric rates across the Midwest increasing between 50 to 130 percent over the next 25 years, but providing an exact near-term outlook over the next two decades is challenging with the unknowns surrounding allowance costs. Industrial users-who constitute over half of NIPSCO's electric business- would also be impacted. Such rate increases could force our large manufacturers to cut jobs, reduce production levels, or even close their doors.

NIPSCO is committed to the passage of responsible climate change legislation as long as every group or region shares the burdens equally. The requirements in the current bill, however, would punish customers of Indiana's coal-reliant utilities while being overly forgiving to utilities in other parts of the country that generate power using nuclear, natural gas and hydroelectric methods.

To improve the legislation and make it more equitable for all consumers, changes need to focus on three areas. The first is effective and meaningful cost-containment provisions, to protect electricity consumers from huge and sudden increases in the cost of electricity. We are seeking additional protective mechanisms to ease the burden on our customers. The second is setting realistic timelines for compliance to allow for development of alternative, economically viable energy sources as well as for reaching emissions reduction targets. In NIPSCO's view, this means supporting the development of clean coal technologies, because Indiana cannot afford to abruptly abandon this abundant and cost-effective energy source. And the third change is to provide reasonable emissions allocations in a manner that is fair to all customers and does not discriminate against consumers in the Midwest. This saves NIPSCO money that would be better invested in new technologies such as advanced coal generation and carbon capture and sequestration.

Well-crafted legislation will allow Indiana to be a leader in the climate change effort instead of a victim. To truly affect climate change, everyone will have to do their part, because this legislation has the power to greatly affect the cost of living and doing business in Indiana. We encourage you to continue educating yourself on the issues of the proposed bill, and we urge you to contact your local and regional Congressional representatives to promote the passage of fairer and smarter climate change legislation.