Electric Utilities Face the Future

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Besides, Entergy and Exelon are clearly motivated by their own self-interest, Rogers adds. If electricity prices soar in the Midwest and Southeast because of higher costs for coal plants, then Wayne Leonard and John Rowe can make a killing selling electricity into those markets from their low-cost nukes. "Trust me, if Wayne was still in the Midwest where he grew up, his story would be different than with the hand he holds sitting in New Orleans, with lots of nuclear," says Rogers.

All-Out Assault

Under pressure from lawmakers and the White House to pass the House bill, the utility industry put aside its conflicts long enough to forge a compromise that doesn't give a big advantage to either faction. But none of the companies is happy with it. As the action shifts to the Senate, where companies are pushing harder for their own interests, the fragile agreement is in danger of falling apart. And the tiffs in this one industry are just a tiny slice of the larger battle as Republicans mount an all-out assault on the measure. To get enough votes to pass, "the bill in the Senate will have to rethink time lines and targets, and add cost containment ideas," predicts Rogers. If the legislation is substantially weakened, though, it risks losing the support of the environmental groups that have worked so hard to get it this far.

Some say the politics of climate change dredge up intractable problems. But finding a path to a climate policy ultimately may be less difficult than, say, reforming health care in the U.S.. For one thing, the landscape is already shifting under the utilities' feet. More than half of the states have mandated certain amounts of renewable energy, and many are imposing their own caps. In addition, the industry's leaders agree with the need to tackle climate change, even as they wrangle fiercely to lessen the impacts on their own companies. Moreover, they realize it's in their own long-term interests to get rules in place now, providing the certainty that may prevent them from making costly mistakes building new power plants. "If our country wants a low-carbon-generation portfolio, I can build it, but I need to know the rules now," says Rogers. Plus, it's cheaper to start soon. "If we don't do anything now, it will cost many, many times more later," says Leonard.

And unlike health care, it's clear what policies provide the financial incentives for cleaner technologies. It's simple economics. Raise the price of emitting carbon dioxide, as with a cap on such emissions, and there will be more money to be made developing low-carbon alternatives. "Let us make money by being green, harnessing the power of American capitalism to push change in the way society wants," advocates NRG Energy's Crane. "I would not apologize for having the profit motive."

Leonard, for one, is hopeful. "The line I always remember from Winston Churchill is that you can always count on Americans to do the right thing, after all other possibilities have been exhausted," he says. "The good news is that we're there."

Carey is a senior correspondent for BusinessWeek in Washington.

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