When push comes to shove, will consumers pay the “green” price?
Regulations that force electric companies to reduce greenhouse gas emissions are becoming more common, but companies may push back ? on residents? wallets.
Federal environment regulations cost the electricity industry an extra $24 billion in investment and operating expenses, a June 2006 Brattle Group study reported.
The extra spending “must be recovered in higher rates.” Totals costs to companies could reach $47.8 billion by 2025, said the study, commissioned by the Edison Foundation.
But a University of Maryland study exploring the effects of joining the Regional Greenhouse Gas Initiative disagrees.
The report says RGGI, a cooperative agreement among states aimed at reducing gas emissions, “will not translate into higher bills for electric customers.”
The study predicts that despite a 13 percent electricity production profit decrease as a result of the new regulations in 2010, customers will experience a reduction of about $22 in their power bill that same year.
Maria Vargas, with the Environmental Protection Agency, said a similar program called EnergyStar saved participants a total of $12 billion on their energy bills in 2005.
“The program also reduced greenhouse gas emissions equivalent to 23 million cars in 2005,” she said.
Matthias Ruth, principal investigator for the UM study, reconciled those two predictions.
“The immediate response of anyone being hit with a tax or a permit they need to purchase will see that as cost to operation, and will say that cost needs to be passed onto the consumer,” Ruth said.
He said as a secondary response, businesses should and can take this as an opportunity to find technology and business strategies that will reduce the costs long-term.
The Maryland Department of Environment commissioned the UM study to assess the economic and energy impact of parts of the state?s 2006 Healthy Air Act. The law calls for Maryland to join RGGI this year and receive annual caps for carbon dioxide emissions.
