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May 2008 — Vol. 86, No. 4

CAPITOL REPORTER

Electricity customers face higher costs under global warming regs

DEP wants generators to buy ‘carbon allowances’

 

The state Department of Environmental Protection (DEP) is rapidly moving forward with regulations to raise hundreds of millions of dollars from electricity ratepayers to address concerns about human-induced global warming. The agency says the regulations are needed to reduce carbon dioxide (CO2) “pollution” that it claims is impacting the environment and public health of Connecticut.

Under the proposed regulations, generators of electricity will be required to purchase “carbon allowances” for every ton of CO2 they emit when they produce energy in the state.

The actual initial cost of the regulations to ratepayers will not be known until at least this September, when the first auction is held for these carbon allowances. But the DEP estimates it will cost between $100 million and $250 million over the first five years of the program. Other estimates are far higher. One environmental group said at the public hearing on the proposed regulations that it would like to see an allowance price high enough to generate nearly $1 billion from electricity ratepayers over the next five years.

Connecticut ratepayers already pay some of the most expensive energy prices in the country. For that reason, CBIA and others have expressed serious concerns about the proposed regulations and urged the DEP to modify them in ways that will reduce the impact on ratepayers.

In its April 15 public-hearing report, the DEP rejected these concerns, stating that “substantially increasing spending on energy efficiency … will mitigate potential energy price impacts.”

“Unfortunately, the tab for this substantial increase in spending will be paid by the state’s residential, commercial and industrial electricity ratepayers — thus making Connecticut an even more expensive state in which to live, work and run a business,” says CBIA Associate Counsel Eric Brown.

The final opportunity to modify or reject the regulations before they become law rests with the legislature’s Regulations Review Committee, which is expected to consider the regulations at its May 27 meeting.

For more information, contact Eric Brown at 860-244-1926.