Vice President Paul Hibbard Discusses Potential Price Effects from Implementing Revised RGGI Model

January 17, 2013

Analysis Group Vice President Paul Hibbard recently shared draft analysis of the electricity bill impacts of proposals to change the emissions cap under the Regional Greenhouse Gas Initiative (RGGI) climate cap-and-trade program. The analysis, which was presented to RGGI stakeholders, reveals relatively modest electricity bill impacts associated with new emission caps.

Mr. Hibbard's presentation and the firm's analysis were cited in "Draft RGGI Analysis Sees Little Power Price Impact from Stricter GHG Cap" (Clean Air Report, January 17, 2013). The article outlines the prevailing arguments for and against the tighter emissions caps associated with RGGI. The nine mid-Atlantic and Northeast states currently taking part in RGGI are conducting a required review of the program and are seeking to finalize a model rule by the end of February, according to the article.

Critics argue that imposing carbon caps on utilities will drive up consumers' utility bills. However, Analysis Group's research suggests that a revised emissions cap from 165 million tons of CO2 down to 91 million tons of CO2 in 2014 -- the most stringent approach states appear to be considering -- would lead to average electricity bill impacts of less than one percent. Mr. Hibbard noted that the analysis "does not count additional customer bill savings beyond 2020 associated with energy efficiency investments, or savings from improvements in the efficiency of fossil fuel use."

An Analysis Group team including Mr. Hibbard, Managing Principal Susan Tierney, Vice President Andrea Okie, and Manager Pavel G. Darling in 2011 released a report quantifying the economic benefits from implementing a multistate regional greenhouse gas initiative. New York Governor Andrew Cuomo referenced the Analysis Group research in his recent State of the State report (NY Rising, January 9, 2013). Governor Cuomo has called for a RGGI emissions cap "that guarantees that we will continue to reduce emissions below current levels."