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."
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