Some states assign “externality costs” to air emissions by electric utility power plants. These plants already have emissions such as sulfur dioxide and mercury limited by the Environmental Protection Agency (EPA) or by the state’s version of EPA. The state utilities commission assigns costs to air emissions – even those allowed by the federal or state EPA – including carbon dioxide, and requires those costs to be used in utility planning. The purpose of this is to internalize the externalities. One concept is that utilities would, in addition, be taxed by an amount equal to the total value of the externalities. Please comment on a) whether you feel that externalities should be monetized in this way and b) whether the total value of the externalities should be assessed to the utilities as a tax.
