The Impact of CO2 Allowance Prices and Retail Electricity Rates
The analysis showed how any impact of CO2 allowance prices on retail electricity rates will be dependent upon the state regulatory structure, the allocation of emissions allowances, price of allowances, and the current generation portfolio in the state. Depending on these different assumptions, the resulting increases in retail electricity rates ranged from as low as 0.05% to as high 41% across all three states. Rates in North Carolina and New Jersey increased significantly more than in Washington State, due to its high percentage of hydro-electric power generation. It was also shown that in a scenario with a hybrid of auction and free allowance allocation, regulatory treatment and the point of allocation are the key determinants for the degree of cost pass through from the generator to the ratepayer. The results highlight how key climate policy issues might interact with the fundamental operations of electric power markets to determine the eventual of impact on ratepayers.
School Location:USA - North Carolina
Source Type:Master's Thesis
Keywords:energy electricity climate change environment
Date of Publication:04/24/2008