Dan DeRuyter's methane digester generates up to 1.2 megawatts of electricity, which is fed into the local utility company’s power grid. It is enough electricity to power 600 to 800 homes. In return, DeRuyter receives about $35,000 a month, depending on the price the utility company is willing to pay. Currently, he is receiving 5 cents per kilowatt-hour, which is relatively low compared to other parts of the country.
If I could just get a reasonable rate for my power, I’d be happy about that,” says DeRuyter, co-owner of a 4,500-cow dairy in Outlook, Wash. “You really need to get paid about 7 cents (per kilowatt-hour) to make the doggone thing work.”
He’s confident that he could get more for his power if he could just sell it in a competitive market. But, due to various regulations, he must take what the local utility is willing to pay. The lack of competition is more of an issue for him at this point than what the U.S. Congress is willing to generate with cap-and-trade energy legislation.
He’s not asking Congress or anyone else for special funding. He just wants the ability to sell his power in a competitive market. “Just allow me to compete,” he adds.
For various reasons, the cap-and-trade legislation now in Congress is no panacea. It does not address the competition issue that DeRuyter is alluding to. And, it could be detrimental to the majority of dairy farmers who don’t have methane digesters.
Legislation in the works
In June, the U.S. House of Representatives passed the American Clean Energy and Security Act, also known as the cap-and-trade bill. Proponents say it will create a clean-energy incentives program that will recharge our economy with new technology, new business and new jobs. Opponents say it will raise energy cost, create more government regulation, and possibly kill off some of the traditional sources of energy in this country, such as the coal industry.
The U.S. Senate may take up the matter this fall.
Yet, a news report on Sept. 16 casts doubt on the future of cap-and-trade legislation. According to CBS News, quoting a previously unreleased analysis by the U.S. Treasury Department, a cap-and-trade law would cost the typical American household an extra $1,761 per year. These types of estimates make the likelihood of passage in the Senate more problematic.
And, more specific to the dairy industry, one has to ask how many dairies are in a position to benefit under cap-and-trade.