Presentation to RGGI StakeholdersApril 6, 2005

Steve FineChris MacCracken

ICF Consulting

RGGI Preliminary

Electricity Sector Modeling Results

Reference Case Sensitivity Results, 35% CO2 Policy Case Results & Offsets

Cases

2

Outline

RGGI CO2 Policy Cases Review + 35% Case Update

• RGGI CO2 Policy Scenarios With and Without US/Canada Policies

Alternative Reference Cases

• Alternative Reference Cases with 25% CO2 Policy

• Alternative Reference Cases - 25% CO2 Policy with US/Canada Policies

CO2 Offset Scenarios

RGGI CO2 Policy CasesReview + 35% Case Update

4

0

20

40

60

80

100

120

140

160

2006 2009 2012 2015 2018 2021 2024

Mill

ion

Ton

s

Ref

Case 2 - 10%

Case 3 - 15%

Case 4 - 25%

Case 5 - 35%

CO2 Emissions across Policy Scenarios

5

0

2

4

6

8

10

12

14

2006 2009 2012 2015 2018 2021 2024

$/T

on

Case 5 - 35%

Case 4 - 25%

Case 3 - 15%

Case 2 - 10%

CO2 Allowance Prices across Policy Scenarios

6

0

20

40

60

80

100

120

2006 2009 2012 2015 2018 2021 2024

TW

h

Ref Case 2 - 10% Case 3 - 15%

Case 4 - 25% Case 5 - 35%

RGGI Imports across Policy Scenarios

7

RGGI Average Annual Energy Prices

$20

$25

$30

$35

$40

$45

$50

$55

2006 2009 2012 2015 2018 2021 2024

$/M

Wh

Ref Case 2 - 10% Case 3 - 15%

Case 4 - 25% Case 5 - 35%

8

RGGI Energy Price ImpactsChange Relative to Reference Case

0%

2%

4%

6%

8%

10%

12%

2006 2009 2012 2015 2018 2021 2024

Ch

ang

e in

En

erg

y P

rice

Case 2 - 10%

Case 3 - 15%

Case 4 - 25%

Case 5 - 35%

RGGI CO2 Policy ScenariosWith and Without US/Canada

Policies

10

0

5

10

15

20

25

2006 2009 2012 2015 2018 2021 2024

$/T

on

25% RGGI 35% RGGI

25% RGGI US/CAN 35% RGGI US/CAN

CO2 Allowance Prices25 and 35% Cases w/ and w/o US/Can

11

$20

$25

$30

$35

$40

$45

$50

$55

2006 2009 2012 2015 2018 2021 2024

$/M

Wh

Ref 25% RGGI

35% RGGI 25% RGGI US/CAN

35% RGGI US/CAN

RGGI Average Annual Energy Prices 25 and 35% Cases w/ and w/o US/Can

12

0%

5%

10%

15%

20%

25%

30%

35%

2006 2009 2012 2015 2018 2021 2024

Ch

ang

e in

En

erg

y P

rice

25% RGGI

25% RGGI US/CAN

35% RGGI

35% RGGI US/CAN

RGGI Energy Price Impacts - Change Relative to Ref Case 25 and 35% Cases w/ and w/o US/Can

Alternative Reference Cases

14

Alternative Reference Case Specifications

Case Description

Low Emissions Reference Case

(Low)

Incremental electric demand growth in RGGI states reduced by 30%

Reference(Ref)

Standard RGGI Reference Case

High Emissions Reference Case

(High)

Gas prices flat at $6.50/MMBtu (real)over all years

New coal capacity allowed in RGGI regions (excluding urban areas)

15

0

5

10

15

20

25

30

35

40

45

Ref. High Low Ref. High Low

2015 2024

Cu

mul

ativ

e G

W

Other

Coal

Gas

RGGI Build Mix Across Reference CasesCumulative through 2015 and 2024

16

0

20

40

60

80

100

120

140

160

180

200

2006 2009 2012 2015 2018 2021 2024

Mill

ion

Ton

s

Ref Low High

CO2 Emissions Across Alternate Reference Cases

17

0

10

20

30

40

50

60

70

80

90

100

2006 2009 2012 2015 2018 2021 2024

TW

h

Ref Low High

RGGI Imports Across Alternate Reference Cases

18

RGGI Average Annual Energy Prices

$20

$25

$30

$35

$40

$45

$50

$55

2006 2009 2012 2015 2018 2021 2024

$/M

Wh

Ref Low High

Alternative Reference Cases25% CO2 Policy

20

RGGI CO2 EmissionsReference vs. 25% Policy Cases

0

20

40

60

80

100

120

140

160

180

200

2006 2009 2012 2015 2018 2021 2024

Mill

ion

Ton

s

Low - 25% CO2 Ref - 25% CO2 High - 25% CO2

Ref.

High

Low

21

RGGI CO2 Allowance Prices

0

2

4

6

8

10

12

14

16

18

20

2006 2009 2012 2015 2018 2021 2024

$/T

on

Ref - 25% CO2

High - 25% CO2

Low - 25% CO2

22

RGGI Imports

0

20

40

60

80

100

120

2006 2009 2012 2015 2018 2021 2024

TW

h

Low - 25% CO2 Ref - 25% CO2 High - 25% CO2

Ref.

High

Low

23

RGGI Annual Average Energy Prices

$20

$25

$30

$35

$40

$45

$50

$55

$60

2006 2009 2012 2015 2018 2021 2024

$/M

Wh

Low - 25% CO2 Ref - 25% CO2 High - 25% CO2

Ref./Low

High

Alternative Reference Cases25% CO2 Policy with US/CANADA

25

RGGI CO2 Allowance Prices

0

5

10

15

20

25

30

35

40

45

2006

2009

2012

2015

2018

2021

2024

$/T

on

High - 25% US/CAN

Ref - 25% US/CAN

Low - 25% US/CAN

0

5

10

15

20

25

30

35

40

45

2006

2009

2012

2015

2018

2021

2024

$/T

on

Ref - 25% CO2

High - 25% CO2

Low - 25% CO2

25% Policies without US/Canada 25% Policies with US/Canada

26

RGGI Annual Average Energy Prices

$20

$25

$30

$35

$40

$45

$50

$55

$60

$65

$70

2006

2009

2012

2015

2018

2021

2024

$/M

Wh

High - 25% CO2Ref - 25% CO2Low - 25% CO2

Ref./Lo

High

$20

$25

$30

$35

$40

$45

$50

$55

$60

$65

$70

2006

2009

2012

2015

2018

2021

2024

$/M

Wh

High - 25% US/CAN

Ref - 25% US/CAN

Low - 25% US/CAN

25% Policies without US/Canada 25% Policies with US/Canada

CO2 Offset Scenarios25% CO2 Policy with US/Canada

28

Offset Scenario Specifications

Scenario CO2 Policy Offset Allowances

Clean Development Mechanism (CDM) 25% Reduction in

RGGI

2015 Stabilization in Rest of U.S.

2008 Stabilization in Canada

$6.50/ton CO2 Backstop in RGGI, U.S. and

Canada

RGGI Offset Supply Curve (Curve)

Offset supply curve implemented for RGGI

No offsets in U.S. or Canada

All offset scenarios run off of standard Reference Case

29

RGGI Offset Supply Curve2015 Curve Shown

$0

$2

$4

$6

$8

$10

$12

$14

$16

6.00 6.50 7.00 7.50 8.00 8.50

Million Tons CO2

2003

$/T

on

30

RGGI CO2 Emissions25% CO2 Case with US/Canada

0

20

40

60

80

100

120

140

160

2006 2009 2012 2015 2018 2021 2024

Mill

ion

Ton

s

Ref

25% US/CAN

CDM-25% US/CAN

Curve-25% US/CAN

31

RGGI CO2 Allowance Prices25% CO2 Case with US/Canada

0

2

4

6

8

10

12

14

16

18

2006 2009 2012 2015 2018 2021 2024

$/T

on

25% US/CAN

CDM-25% US/CAN

Curve-25% US/CAN

32

RGGI Imports25% CO2 Case with US/Canada

0

10

20

30

40

50

60

70

80

90

100

2006 2009 2012 2015 2018 2021 2024

TW

h

Ref

25% US/CAN

CDM-25% US/CAN

Curve-25% US/CAN

33

RGGI Annual Average Energy Prices25% CO2 Case with US/Canada

$0

$10

$20

$30

$40

$50

$60

2006 2009 2012 2015 2018 2021 2024

$/M

Wh

Ref

25% US/CAN

CDM-25% US/CAN

Curve-25% US/CAN

34

Impact on RGGI Annual Average Energy PriceRelative to Reference Case

0%

5%

10%

15%

20%

25%

30%

2006 2009 2012 2015 2018 2021 2024

Ch

ang

e in

En

erg

y P

rice

25% US/CAN

CDM-25% US/CAN

Curve-25% US/CAN

Appendix

36

0

20

40

60

80

100

120

2006 2009 2012 2015 2018 2021 2024

TW

h

Ref 25% RGGI

35% RGGI 25% RGGI US/CAN

35% RGGI US/CAN

RGGI Imports 25 and 35% Cases w/ and w/o US/Can