House Bill Will Spur 20% Energy-Price Hike by 2030
The average U.S. electricity customer
would face a 20 percent energy price increase in 20
years under climate legislation passed by the House last
month, according to a draft analysis by the Energy
Information Administration.
The House bill by Democrats Henry Waxman (Calif.) and Ed
Markey (Mass.) would force energy prices to climb to 12
cents per kilowatt-hour in 2030 -- 20 percent above
EIA's 2009 projections -- under a scenario in which
low-emission technology is developed on schedule and
offsets are not constrained, the Energy Department
agency says in the draft obtained by E&E.
Energy price prices will vary from 11 to 17.6 cents per
kilowatt-hour in 2030 under six different scenarios EIA
analyzed. The scenarios vary by the readiness of
technology, generation costs and the availability of
offsets for carbon dioxide emissions that exceed the
federal cap, the draft says. The Waxman-Markey bill
would cap and reduce carbon emissions by 17 percent by
2020 and 83 percent by 2050 compared with the 2005
baseline.
The current average energy price is about 10 cents per
kilowatt-hour.
In the short term, energy prices rise to only about 9.5
cents per kilowatt-hour in 2020, about 3 percent above
"business as usual," reflecting the free allocation of
emission allowances available until 2025, the report
notes.
The rise in energy prices spurred by the bill will
reduce household consumption by $142 (in 2007 dollars)
in 2020 and will deplete consumption by $583 in 2030
under the "basic" scenario, the report says. Overall,
U.S. gross domestic product will decrease by 0.2 percent
in the basic case, or by about $492 billion (in 2000
dollars) from 2012 to 2030, the report says.
The draft predicts that the cost of greenhouse gas
allowances will range from $32 per metric ton in 2020 to
$65 per metric ton in 2030 under the basic case.
But EIA's energy price modeling formula can only
forecast up to 2030, the report says. It also doesn't
account for several provisions, including the impact of
financing of advanced low-emission technology, the
distribution of allowances to merchant coal plants, the
strategic allowance reserve, and effects of increased
investment in energy research and development.
The report says the bill's clean-energy bank provision
"may have the most significant potential to alter the
reported results."
Other uncertainties noted by the report: the cost and
public acceptance of low- and no-carbon technologies and
the role of offsets whose availability will be based on
decisions by U.S. EPA and international agreements. The
report estimates that under the basic scenario, about 39
percent of the emission reductions under the bill would
come from domestic abatement, while the rest of the 61
percent of the emission reductions would come from
offsets.
EIA spokesman Jonathan Cogan said the agency plans to
release a final version of the report soon.
Katherine Ling, Darren Samuelsohn
http://www.nytimes.com/gwire/2009/08/04/04greenwire-house-bill-will-spur-20-electricity-price-hike-28686.html
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