Governor Rell Will Require Relief For Ratepayers Under Greenhouse Gas Laws

Governor Rell Will Require Relief For Ratepayers Under Greenhouse Gas Laws

Governor M. Jodi Rell announced today that she will require an amended provision to Connecticut’s Regional Greenhouse Gas Initiative to provide relief for ratepayers when the sale of emission allowances to power generating companies exceeds certain levels.

“I am insisting that we take this extra step to soften, in any way we possibly can, the unexpected costs that may results from this very important regional initiative,” Governor Rell said. “This provision is intended to provide real relief at a time when families are struggling just to cover the basics – gasoline, groceries, electricity and heat.”

The Governor has directed Department of Environmental Protection (DEP) Commissioner Gina McCarthy to add a provision for consumer rebates to regulations the agency has drafted under the Regional Greenhouse Gas Initiative (RGGI).

Connecticut is one of 10 northeastern states participating in a 2005 landmark “cap-and-trade” program aimed at controlling carbon dioxide emissions in the United States.

“While we are taking historic steps to protect our environment now and for future generations, we must also be mindful of the very real economic pressures that Connecticut businesses and families are facing,” the Governor said. “Connecticut families and businesses are under enormous pressure created by rising energy costs.”

Under RGGI, the states cap the amount of carbon dioxide plants can release. Companies buy “allowances” to cover their emissions and the money generated will be invested in energy efficiency and clean technology.

The first auction of those allowances is September 10.  Experts believe allowances will sell for $3 to $5 a ton. The Governor’s plan calls for a portion of funds raised through the sales of allocations to be set aside for consumer rebates if the allocation price exceeds $5 a ton.

The proposed DEP regulations are currently before the Legislative Regulations Review Committee, which is scheduled to meet July 22. Governor Rell said although there are many safeguards built into RGGI, it is critical that Connecticut do even more by adding her cost containment provision to protect ratepayers.

In her letter to Commissioner McCarthy, the Governor wrote, “As we all know, the recent sharp escalation of the price of oil is a situation that poses a significant threat to the economic well-being of our state and the welfare of all our residents. We can move this important initiative forward in a way that will ensure – without a doubt – that ratepayers will not be adversely impacted at a time when they can least afford it.”

RGGI is an agreement among Connecticut and nine other northeastern states – Delaware, Maine, New Hampshire, New Jersey, Maryland, New York, Vermont, Massachusetts and Rhode Island – to reduce carbon emissions which cause climate change from fossil-fuel burning power plants of greater than 25 megawatts.

Connecticut became one of the earliest backers of RGGI in December 2005, when Governor Rell signed an agreement to participate in this first-of-its kind program.  The Governor also submitted legislation, which was approved by the 2007 General Assembly, authorizing the state’s participation in RGGI.

Additional RGGI Background

RGGI is the first cap-and-trade program to control carbon dioxide emissions in the United States. The program is aimed primarily at reducing carbon dioxide pollution through a mandatory emissions cap on the electric generating sector, coupled with a market-based trading program to achieve the lowest possible compliance costs.

Under the cap-and-trade portion of the agreement, power plants must hold allowances to cover all of their emissions.  Power plants will be required to:

Purchase allowances from those initially held by the state – which will provide the public sector with funds to support investments in energy efficiency, clean energy technology or other consumer benefits.

If a power plant needs more allowances, they may be purchased from those plants that have reduced their emissions below required levels; or

Additional offset credits may be created or purchased through the implementation of carbon dioxide reduction programs outside the energy sector.

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