A new study funded by the American Coalition for Clean Coal Electricity found that most of the states subject to the U.S. EPA’s Clean Power Plan (CPP) will see significant increases in electricity prices. The Coalition hired The National Economic Research Associates (NERA) to conduct the study, which was published November 7, 2015.
NERA’s report examined two different compliance strategies with intra-state or regional trading. States can choose either a rate-based or mass-based approach to compliance. Under a mass-based approach, states would be trading emissions allowances but, under a rate-based plan, states would be trading emissions rate credits. The modeling presented a possible range based on two potential allocations of the allowances. In the first scenario, the allowances are auctioned to generators and electricity price impacts of the CPP are not reduced. In the second scenario, 50% of the allowances are auctioned to generators and the other half are freely distributed to local distribution companies to be used as credits to retail rates. The study found that in both scenarios electricity rates will increase.
Implications from NERA’s Study:
The NERA study, funded by an opponent of the CPP, casts a very different light on the implementation costs and benefits of the CPP than those presented by the EPA. The EPA projected the CPP implementation costs at $41 to $50 billion, with a public health benefit of $26 to $45 billion by 2030.
NERA’s State-by-State Analysis:
The study’s authors collected four points of data across every state. Average percentages for those data points are below. One piece of data stands out as affecting consumers greatly in the near term, average annual electricity price increases of 11% to 14%
Official Report: Follow Link to Download the Analysis
State-by-State Analysis: What Does EPA’s Plan Mean to Your Home State?
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