Conducting a Review of the Regional Greenhouse Gas Initiative’s Impact on Consumer Electricity Bills

Early in 2013, the Regional Greenhouse Gas Initiative (RGGI), a regional cap-and-trade program for nine Northeast states, conducted a comprehensive program review to identify what, if any, changes would be required to the model rule that governs the initiative's goals and operations. As part of this review, RGGI retained an Analysis Group team, led by Principal Paul Hibbard and including Managing Principal Pavel Darling, to assess the potential effects of a proposed reduction in the regional cap on emissions.

To calculate average potential effects on monthly electricity bills for residential, commercial, and industrial customers in the nine Northeast states, the team analyzed data from publicly available sources and from proprietary models commissioned by RGGI. It then compared the monthly bills in the "status quo" case where the emissions cap remained at current levels to monthly bills in the "alternative" case where the cap was reduced. The difference in monthly bills would reflect the impact of the proposed rule change. Additionally, states participating in RGGI would have the option of investing their auction proceeds in energy efficiency programs or direct bill assistance. Consumers who participate in these programs would, as a result, have lower monthly electric bills.

The Analysis Group team prepared materials showing the billing effects of the reduced emissions cap on each category of customer in each RGGI state, and it presented these materials at several stakeholder meetings. "After taking into account the increase in wholesale electricity rates, and combining that with the savings to consumers from more energy efficiency programs and direct bill assistance, we find that impacts from the reduced emission cap would be less than 1% across the three classes of consumers," Mr. Hibbard said.

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