Connecticut is one of nine eastern states that has agreed to a draft proposal for reducing carbon emissions from power plants by an additional 30% from 2020 to 2030.

The group of Northeastern and Mid-Atlantic states, known as the Regional Greenhouse Gas Initiative, announced the new emissions targets late last month.

RGGI carbon emissions allowancesThe proposal means additional charges on residential, commercial, and industrial electric ratepayers to support energy efficiency and clean energy programs.

RGGI has raised about $180 million from Connecticut ratepayers since its inception in 2008, approximately $20 million a year.

Currently, about 70% of the money goes to fund energy-efficiency programs, and about 23% to support clean and renewable energy programs.

These programs help participating residents, businesses, and governmental agencies reduce overall energy bills while cutting power generation.

The proposed changes, which still must be finalized, require affected power generators to purchase more carbon allowances at a higher price to comply with lower emissions caps.

Those costs are passed to electric ratepayers through their electric bills.

Allowances

The price of each allowance fell precipitously in recent years due largely to greater energy efficiency as well as a shift from coal and conventional fuel oil to natural gas, biofuels, and renewables.

The latest allowance price—determined by quarterly auctions—was $2.53 compared to the high of $7.50 in December 2015.

The impact is estimated at $33 monthly for commercial customers and $310 for industrial customers.
Reducing the allowable carbon emissions from electricity power plants, however, will drive up the price of each allowance and generate more revenues for RGGI-funded programs.

The current proposed changes to RGGI do not forecast a specific price increase, but give the RGGI state regulators the option to freeze the maximum price at $13 in 2021.

The price would increase 7% each year so that a freeze would only be allowed in 2030 if it reached $23.90—an over eight-fold increase above the current allowance.

Ratepayer Impact

CBIA estimates the impact on electricity bills to be in the neighborhood of $3 per month for residential customers, $33 per month for commercial customers, and $310 per month for industrial customers.

These are rough estimates based on 2010 data. CBIA will request a more precise estimate prior to final consideration.

If electricity customers use the clean energy and energy efficiency programs funded by the RGGI dollars, they are likely to receive a net reduction in their electric bills—so it would be worthwhile to explore whether these programs can help reduce overall costs.

The RGGI states are seeking comments from stakeholders on the draft proposals at a public meeting to be held Sept. 25 in Baltimore.

Materials, including a stakeholder meeting notice and a supplementary table of year-by-year regional numbers, are posted on the RGGI website. Additional materials will be provided before the public meeting.

RGGI includes the six New England states plus New York, Delaware, and Maryland.


For more information, contact CBIA's Eric Brown (860.244.1926) | @CBIAericb