Greenhouse gas pact expected to raise energy costs<br><i>But R.I. can use credits to invest in efficiency</i>

Gov. Donald L. Carcieri’s decision to have Rhode Island join a regional effort to curb greenhouse gas emissions will cost the owners of the state’s five natural gas-fired electricity power plants far less than if the power stations were coal-fired, according to experts.
In comparison, costs associated with the Regional Greenhouse Gas Initiative will be much higher at older coal-fired plants such as Brayton Point in nearby Somerset, Mass., which produce a far greater amount of the carbon dioxide the pact is designed to curb, they said.
“Relatively speaking, the Rhode Island power plants are in a better posture,” said Cynthia Giles of the Conservation Law Foundation. “The gas-fired plants emit less carbon, so they’re in a relatively better position than a coal-fired power plant.”
Rhode Island was the final New England state to sign on to the RGGI accord, which takes effect in 2009 and is designed to reduce carbon dioxide emissions at power plants throughout the Northeast and mid-Atlantic by 10 percent within 10 years.
Carcieri announced Rhode Island would sign on in his State of the State address Jan. 30. Massachusetts entered the agreement just weeks earlier, after Gov. Deval Patrick took office.
To cut emissions, RGGI signatories will use a cap-and-trade system similar to previous efforts to reduce acid rain. Each year, each state gets a proportional share of the emissions allowance, and power generators then need to reduce their carbon emissions to meet the cap or buy credits from any state in the pact to cover the amount of excess emissions.
The Conservation Law Foundation and other environmental groups hailed Rhode Island’s entry into the agreement as an important step towards controlling global warming.
“There is increasing consensus around the world about the importance and the reality of climate change,” Giles said. “In Rhode Island this is affecting us already. We’re seeing sea levels rise here in Rhode Island; we’re seeing impacts on fisheries from the warmer water; and we’re seeing the possibilities of more frequent and more intense storm events.”
Rhode Island participated in the early stages of drafting RGGI, but Carcieri did not sign on out of concern that the agreement would raise the cost of electricity.
He changed his mind based on assessments from his energy and environmental advisers that the RGGI could raise the cost of electricity here regardless of whether Rhode Island was part of the agreement, but that allowances the state would receive as part of the initiative could offset electricity price hikes, said Jeff Neal, a spokesman for Carcieri.
Rhode Island’s allocation of allowances under the program is 2.6 million tons of carbon – a figure that was based on the amount of carbon the state’s power plants generated from 2000 to 2002, when RGGI compiled its data.
In comparison, Massachusetts’ allowances are well in excess of 25 million tons. Brayton Point alone emits more carbon dioxide than all of Rhode Island’s power plants combined, said Michael Sullivan, director of the R.I. Department of Environmental Management.
The power generators in Rhode Island that will be affected by the RGGI are Ocean State Power, in Burrillville; Rhode Island State Energy Partners, in Johnston; the Manchester Street Station, in Providence; the Tiverton Power Plant, and Pawtucket Power Associates LP. None could be reached for comment for this story.
Many states participating in the pact are expected to auction their RGGI allowances to power generators in an effort to make as much money as possible to reinvest in energy efficiency, conservation and renewable initiatives, Giles said.
Rhode Island has not decided if it will auction off its allowances or come up with another formula for their use.
“We have to look very carefully at how we market them … because we’re a small player, and we need to get maximum value,” Sullivan said.
The decision is crucial, Giles said, because investing heavily in energy conservation and renewable sources is the only way to offset cost hikes expected to occur due to the RGGI.
A recent study cited on the foundation’s Web site concluded RGGI could eventually save residential electricity customers more than $100 annually, if money paid by power generators under the program was used to foster greater energy efficiency.
But that only works if the state’s allowances are sold to the highest bidder, Giles said.
“All the modeling which shows there could be a net benefit to consumers is based on the assumption that we do that,” she said. “If we start giving those allowances away to power companies, we will lose that benefit.”