Lisa Petraglia

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