Energy and Clean Technology Alert: Electricity Prices in Northeast Not Likely to Increase from Carbon Costs


The initial price for power plants in the northeast to purchase allowances to emit carbon, if sustained over time, is not likely to produce an appreciable increase in the price of electricity to businesses and residential customers. That seemed to be the consensus of several experts at a recent Environmental Business Council of New England (?EBC?) forum cosponsored by Mintz Levin and ML Strategies. The experts cited at least two reasons in reaching this consensus. First, the allowance cost would be less than 2% of the current average cost to operate the gas-fired power plants that set regional wholesale electricity prices. Second, most of the revenue from allowance auctions will be reinvested in electric efficiency programs that should decrease overall electricity demand and thereby reduce prices.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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