Waxman-Markey Climate Change Bill Fully Offsets Average Purchasing Power Loss for Low-Income Consumers
Also Reaches Some Moderate-Income Households
 In a cap-and-trade system, the cost to companies of buying the emissions allowances is a business expense that is passed on to consumers as higher prices, including higher electricity and natural gas bills. Waxman-Markey gives free allowances to LDCs but requires them to use those allowances to benefit their customers, presumably by selling the allowances and using the proceeds to give customers relief on their utility bills. In the bill, natural gas utilities are required to use a portion of their free allowances for energy efficiency programs, but there is no similar requirement for electric utilities. This creates ambiguity about whether and to what degree LDCs can use the proceeds from selling their allowances for energy efficiency expenditures, rather than to directly lower their customers’ bills.
 As other Center on Budget and Policy Priorities’ analyses explain, distributing consumer relief through utility companies poses a series of problems. See Chad Stone, “Holding Down Increases in Utility Bills Is a Flawed Way to Protect Consumers While Fighting Global Warming,” Center on Budget and Policy Priorities, April 27, 2009, https://www.cbpp.org/cms/index.cfm?fa=view&id=2800.
 See Sharon Parrott, Dottie Rosenbaum, and Chad Stone, “How to Use Existing Tax and Benefit Systems to Offset Consumers’ Higher Energy Costs Under an Emissions Cap,” Center on Budget and Policy Priorities, April 20, 2009, https://www.cbpp.org/cms/index.cfm?fa=view&id=2790.