Jul 19, 2009

Cap and Trade Winners and Losers - Study

American Public Power Association, the National Association of Regulatory Utility Commissioners, report analyzes three different scenarios for allocating emission allowances and determines that the scenario that produces the lowest cost for consumers is one in which all emission allowances are allocated for free to LDCs, the utilities that deliver power to the customer. Although this scenario will likely result in higher electricity prices, it will also allow regulatory entities to use benefits from the allowances for programs...

Allocating allowances to merchant generators needlessly increases costs to consumers because it reduces the number of allowances available to LDCs which are required to use the allowances to mitigate consumer costs.

The report, based on credible electricity plant-specific data from the Environmental Protection Agency aggregates consumer and producer impacts by regions of the country. It demonstrates how allocating allowances to merchant generators will increase unproductive costs for consumers.

The report states: "One particularly dramatic manifestation of these effects is the windfall profits that would accrue to the owners of unregulated non-emitting generators (i.e. nuclear and hydroelectric) under cap-and-trade. This windfall would amount to several billion dollars annually."

Full Study Here (PDF; 47 KB)