A new Energy Information Administration (EIA) report analyzing the economic impacts of a proposed national Clean Energy Standard (CES) projects that in 2035, a CES could increase power generation costs by almost 30% nationwide.
Rep. Ralph Hall (R-Texas), Chair of the House Committee on Science, Space, and Technology, asked the EIA to prepare the report, titled “Analysis of Impacts of a Clean Energy Standard,” in July 2011 with a defined list of stipulations. One assumption, for example, is that the CES would start from an initial share of 44.8% in 2013 (qualified generation as a percent of sales) and that utilities should achieve 80% qualified generation by 2035.
Among the report’s major findings are that household electricity bills could increase by $115 per year in 2025 and by $211 in 2035. Nationwide, expenditures on power would increase by $41 billion in 2025 and by $77 billion in 2035. Certain regions would see higher hikes: In 2035, power prices would increase 42% in Texas, 46% in Oklahoma, and 47% in Tennessee/Kentucky. Colorado would see a 48% hike, Eastern Pennsylvania and New Jersey a 51% hike, and Long Island, a 51% hike. Southern Illinois/Eastern Missouri would see the biggest power price increase: 61%.
The study also found that, compared to the EIA’s reference case from its Annual Energy Outlook 2011, where it found that coal-fired generation would grow 23% between 2009 and 2035, a CES would decrease coal generation by 46% in the same timeframe.
A CES would also double wind capacity and substantially increase biomass, which would replace coal. With a CES, annual power sector carbon dioxide emissions would be 60% below the reference case. Natural gas prices would also increase with a CES—because natural gas will account for much of the incremental CES compliance in earlier years of the legislation, the EIA says.
Hall said in a statement he requested the report after learning from Energy Secretary Steven Chu that the DOE was unaware how much a national CES would cost.
Responding to the report and Hall’s analysis, Rep. Eddie Johnson (D-Texas) countered that the findings of the study were “predictable when it was first requested, and not because the policy scenarios modeled here represent reality.”
The EIA was not to blame, she said. “Not surprisingly, some of my Republican colleagues do not support the President’s proposal for a Clean Energy Standard (CES), and the requested analysis was designed to show a worst-case cost scenario by omitting a number of important factors and sensitivities that would have made for a much more comprehensive and realistic picture of our future energy economy.”
One example was that the report did not adequately anticipate how regulatory certainty and innovative policies can “mobilize capital and unleash the power of the public and private sector in revamping our aging energy infrastructure with new, cleaner, more efficient and sustainable technologies,” she said. Various other stakeholders had done a more comprehensive analyses and were continuing to run models to help determine the lowest-cost and most effective design for a CES, she said.
The EIA is expected to release a study requested in August by Sen. Jeff Bingaman (D-N.M.), who chairs the Senate Energy and Natural Resources Committee. That should provide a “more rigorous analysis accounting for such critical factors as flexibility in purchasing, trading and banking of the clean energy credits,” she added.
Sources: POWERnews, EIA, House Committee on Science, Space, and Technology