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Presented by Lisa Petraglia & Dwayne Breger (MA DOER)

Economic Impacts of RGGI under the Proposed SWG Package Scenarios. Presented by Lisa Petraglia & Dwayne Breger (MA DOER) 2 Oliver Street, 9 th Floor, Boston, MA 02109 September 21, 2005. Status and Preliminary Findings.

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Presented by Lisa Petraglia & Dwayne Breger (MA DOER)

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  1. Economic Impacts of RGGI under the Proposed SWG Package Scenarios Presented by Lisa Petraglia & Dwayne Breger (MA DOER) 2 Oliver Street, 9th Floor, Boston, MA 02109 September 21, 2005

  2. Status and Preliminary Findings • The REMI analysis now reflects the new Reference Case and Energy Efficiency measures in the proposed Package. • The results are complete for the SWG proposed Package Scenario. • Projected changes to retail prices are small in the Package Scenario and modest under the High Emissions case. • RGGI has small positive impacts on the economy of the region – those impacts are small, generally within two-hundredths of 1% change in economic indicators.

  3. Overview of Presentation • Results for SWG Proposed Package Scenario • Stabilization through 2015, 10% reduction by 2020 • Offsets and EE Measures • Retail Price Impacts (conversion of IPM wholesale price changes) • Integration of EE Investments, Costs, and Savings into REMI • Economic Impact Results • Stated as difference between how the economy performs in a given year in a reference scenario and a policy (RGGI) scenario. • Performance is gauged by changes in: • Gross State (or Regional) Product (GSP or GRP) • Employment • Personal Income

  4. Retail Price Impact Analysis • IPM Wholesale (Firm Power) Prices were converted to Retail prices for Residential, Commercial, and Industrial customer classes • Conversion considers historical relationship between wholesale and retail costs to determine retail price adder. • Sources: EIA and NEPOOL, NYISO, PJM Annual Market Reports • Retail price change is used to determine impact on annual bill of typical household. • For the REMI analysis, wholesale to retail conversion maintains use of EIA/NEMS forecasts. • REMI needs consistent method and inclusion of national price trends. Relative prices are key to REMI impacts.

  5. Impact on Retail Electricity Rates Increase (%) in Retail Rates due to SWG Proposed Package Scenario (after conversion of IPM wholesale rate impact)

  6. Impact on Retail Electricity Rates Increase (%) in Retail Rates due to SWG Proposed Package Scenario under High Emissions Case (after conversion of IPM wholesale rate impact)

  7. Impact on Typical Household Bills Results for SWG Proposed Package Scenario Based on annual average HH electricity bills for 2004-2005 from EIA Electric Power Monthly.

  8. Impact on Typical Household Bills Results for SWG Proposed Package Scenario under High Emissions Case Based on annual average HH electricity bills for 2004-2005 from EIA Electric Power Monthly.

  9. Integration of Energy Efficiency in REMI • EE investment spending stimulates industry sectors • Costs of making EE investments • End-users’ costs • Public (SBC) costs • EE impacts end-users’ energy spending (bill impact)

  10. EE Investment Spending – Industry Stimulus • IPM provides EE expenditures by end-users and public programs. • End-User expenditures – 100% allocated to EE measures and NAICS • Public Program expenditures – 60% allocated to EE measures and NAICS, 36% to administrative activities, 4% private profits. • EE Investments allocated by IPM to Res/Comm/Ind customer classes. • Investments by each class are allocated to EE measures (e.g. lighting, appliance, motors, etc.) • Each measure is mapped to NAICS industry sector

  11. EE Investment – Allocation of Costs • IPM provides EE expenditures by end-users and public programs. • Out-of-pocket investment expenditures by end-users and public SBC are allocated as costs to businesses and households. • RGGI program may provide public EE program funds through public allocation set-aside. • Redirecting cost from SBC to RGGI public benefit program will reduce costs to businesses and households, improving impacts of current analysis. • Analysis considers full public cost borne through SBC charge.

  12. EE Investment – End-User Bill Impacts IPM provides output for EE GWh savings for Res/Comm/Ind classes. Each customer class’ expenditures are reduced by MWh savings times retail price. EE measures are considered to have a lifetime of 14 years.

  13. Macro Economic Impacts of SWG Package Proposal Summary of Results The combined effect of the Package Scenario energy price increases and capacity investment leads to small negative economic impacts - generally below two-hundredths of 1% for GRP, Personal Income, and Employment. The inclusion of the energy efficiency component to the Package Scenario creates overall positive economic impacts across the Total RGGI region - on the order of two- to three-hundredths of 1% for GRP, Personal Income, and Employment. Modeling did not include the economic benefits associated with the investments in offsets.

  14. Summary of Regional Economic Impacts (%) REMI Results for SWG Proposed Package Scenario Regional impacts are relative to Reference Run

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