A plan to dramatically shrink greenhouse gas emissions will boost electricity prices in the Quad-Cities by at least 20 percent in just three years, MidAmerican Energy Co., the area’s largest electric utility, warns.

Backers of the plan, though, say the utility’s estimate is seriously flawed, and the plan actually puts in place a number of measures that will protect people from significant price boosts.

All last week, a congressional committee took the first concrete steps toward drafting a far-reaching carbon emissions bill that’s aimed at curbing global climate change and moving the country’s energy supply away toward more renewable sources of energy.

In recent months, there’s been a growing recognition in the public, and notably among large corporations that stand to bear the brunt of some of the increased costs of limiting carbon use, that something needs to be done.

But the unpredictability of how such a measure would hit the economy and the pocketbooks of average Americans, especially those with low incomes, is a key factor in whether the bill lives or dies.

Critics have warned of massive price increases and economic dislocation.

Backers of the plan say they’re crying wolf.

Iowa may see big impact

Both sides say Iowa and the Midwest will see a significant impact, though they say so for different reasons.

The state not only is growing its renewable energy industry — which backers say will be bolstered by the plan — but also three-quarters of its electricity generated comes from coal-fired plants.

That, say doubters, will put more of the cost burden on Midwest states, as utilities are forced to lower their carbon footprint.

While three-quarters of Iowa’s electricity comes from coal, nationwide, it’s less than half.

Debate over the bill involves some Iowa players, too.

MidAmerican has taken a visible role opposing the plan.

Meanwhile, two other major Quad-City companies, Alcoa and Deere & Co., are part of a group  pushing the approach, commonly called cap and trade.

“We think it’s a good long-term approach,” said Kevin Lowry, a spokesman for Alcoa, which employs 1,900 people in the Quad-Cities.

He said it was premature, however, to discuss what impact a cap and trade program might have on its Riverdale plant.

A Deere spokesman said the company doesn’t comment on the potential impact of pending legislation. But it backs the U.S. Climate Action Partnership, which has been supportive of the process.

Another local link to the debate is U.S. Rep. Bruce Braley, D-Iowa, who is a member of the House Energy and Commerce Committee.

The panel passed a 946-page proposal Friday, which has become the template for debate.

Plan would impose caps

Introduced by Reps. Henry Waxman, D-Calif., and Edward Markey, D-Mass., the bill would cap carbon emissions at 83 percent of their 2005 levels by 2020 and lower that limit to 17 percent in 2050.

The bill also would require that 20 percent of an electric utility’s generation come from renewables, with a small part allowable through energy efficiency measures.

The bill would then set up a trading market, where companies could purchase permits, called allowances, letting them emit carbon if they can’t meet the cap.

Not all of the allowances would be sold.

Most, about 80 percent in 2012, would be given away, with a little more than a third going to utilities to blunt the impact on consumers.

Fifteen percent of the allowances will go to low-income people for additional help with potential cost increases as a result of the measure.

MidAmerican opposed

Last week, MidAmerican broke with its main industry group, the Edison Electric Institute, in outright opposing the bill.

“The cost to consumers are huge and significant,” Bill Fehrman, MidAmerican’s president, said in an interview.

The company backs a carbon cap, he said, but objects to the trading mechanism.

It perfers that companies work with the states that regulate them to come up with an alternative enforcement mechanism.

Fehrman says the cap and trade system will result in a “huge wealth transfer to coastal states” because they rely less on coal for their electricity. And MidAmerican, he says, won’t get credit for the moves it’s already made to diversify its portfolio to include more wind.

MidAmerican argues the pending bill will cost its customers $300 million in 2012.

Those costs will go up as the free allowances phase out, and they don’t even include the costs to develop technologies to lower carbon output, the company says

Braley disputed the company’s analysis, saying it overstated what the company’s emissions will be.

The estimate also overestimates the projected cost of the permits, he said.

MidAmerican used a $25-per-ton figure, and said some industry estimates say that it could go to $100.

The U.S. Environmental Protection Agency, however, estimated the cost per ton at $13 to $17 in 2015 in its analysis of a Waxman/Markey draft last month.

“What they’re giving you is a so-called conservative estimate that is twice the projected price of a more expensive version of the legislation we’re talking about,” Braley said.

MidAmerican responds the EPA analysis also uses some “favorable assumptions.”

Backers of the bill say giving 35 percent of the emission allowances to the utility industry addresses the worry from coal-reliant states. They say it covers 90 percent of their emissions.

Braley says the net impact of the bill will be savings to consumers, when efficiency provisions are considered.

Acid rain comparisons

The wide-ranging bill not only seeks to cap emissions but also provides massive incentives for renewable fuels and energy efficiency programs.

Braley has toured the 1st District touting the bill’s provisions for wind energy, a growing industry in the state.

Environmentalists, too, say this will help the state.

“In Iowa, we’re going to see a net positive, a significant positive gain,” said Andrew Snow, policy advocate for the Environmental Law and Policy Center in Des Moines.

MidAmerican has struck a more aggressive pose than even other Iowa utilities.

Alliant Energy, which serves the Quad-City region, hasn’t outright opposed the bill. But it has warned of potential price increases, especially if a large chunk of the allowances are to be auctioned.

Alliant Energy, using a $20-per-ton estimate, said costs would go up 4 to 7 percent if a quarter of the allowances are auctioned.

If they were all auctioned, as President Barack Obama proposed, the increase would be 16 to 26 percent.

Randy Bauer, the company’s director of asset strategy, said as the free allowances are phased out, consumers will feel a greater impact.

“Energy will go up greater than the price of inflation” in the long term, he said.

Environmentalists, however, say projections of price increases have been made before, during the early 1990s, when a cap and trade plan was put in place to control acid rain.

“This is the kind of thing we’ve been hearing since automakers told us they couldn’t put in seat belts,” Snow said. “I think the costs will be minor if not completely mitigated.”

Utility industry officials say the acid rain comparison is not fair, at least in part because there was technology in place then to deal with that problem.