Dramatic
Price Hikes Forecast in Absence of Generator Allowances
Consumers will pay higher prices if independent
power producers are not provided adequate allowances under new cap and trade
legislation, according to a study released today by Generators for Affordable
Power (GAP).
Without the emissions allowances provided in the
House-passed American Clean Energy and Security Act (H.R. 2454), change
legislation could result in a loss of coal-fired merchant electricity
generation nationwide. This loss would translate into an 11-16 percent increase
in energy prices nationwide. In markets that rely heavily on merchant coal
electricity generators, consumers could see over 20 percent increases in energy
prices. Moreover, with fewer coal-fired plants operating, the demand for
replacement energy sources would also drive the price of natural gas up 12-16
percent.
"I am committed to passing climate change
legislation, and a critical component of that legislation is the provision of
free allowances to emitters in order to protect ratepayers and ensure a smooth
transition during the time before carbon capture and storage technologies are
available," said U.S. Representative Rick Boucher (D-VA). "In
developing the House-passed legislation, we worked with countless stakeholders
from consumer groups, environmental organizations, and businesses to craft an
equitable allocation formula. The development of this formula was critical to
our success in the House. Each provision of the allocation to utilities is
critical to the entire package, and the study released today confirms the
importance of free allocations to the program's effect on electricity cost and
reliability."
Under current and developing laws, merchant coal
electricity generators must expend a significant amount of capital on existing
facilities to meet environmental standards. The added cost and market
uncertainties of complying with carbon emissions standards without allocations
of free allowances will make financing these investments difficult if not
impossible in many cases. The inability to finance these investments could force
a significant number of these facilities to shut down prematurely.
The results of the study confirm the need to
maintain the allowance allocation provided to independent power producers under
the Waxman-Markey legislation. These allowances are critical for protecting
consumers from drastic spikes in electricity and natural gas prices, providing
an orderly transition to less carbon- intensive electricity generation and for
carbon capture technology, and ensuring continued reliability of the nation's
electricity supply.
"Without those allowances, individual
facilities will either be forced to shut down or pass compliance costs on to
consumers. In either case, Americans who are already struggling under today's
economy will be paying more just to keep their lights on," said Paul
Evanson, Chairman, President and CEO of Allegheny Energy.
About Generators for Affordable Power (GAP)
GAP is a coalition of independent energy
producers, or "merchant generators," who sell wholesale, coal-fired
power to local distribution companies (LDCs) that, in turn, deliver power to
homes and businesses. Independent energy producers operate plants nationwide
with major operations in Virginia, Pennsylvania, Illinois, Maryland,
Massachusetts, New York, West Virginia, Ohio, Texas, New Jersey, Delaware,
Louisiana, Connecticut and Indiana.
GAP member companies include Allegheny Energy,
Ameren, Constellation Energy Group, Dynegy, Edison International, Energy Future
Holdings, FirstEnergy, GenPower, Mirant Corporation and RRI. Coal-fired generation
facilities associated with GAP companies employ over
13,000 people at 77 facilities with a generation capacity of over 60 gigawatts.
SOURCE Generators for Affordable Power (GAP)
Originally published by
Generators for Affordable Power (GAP).
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