1. Economic Impacts of RGGI under the Proposed SWG Package Scenarios
Presented by
Lisa Petraglia & Dwayne Breger (MA DOER)
2 Oliver Street, 9th Floor, Boston, MA 02109
September 21, 2005

2. Status and Preliminary Findings
The REMI analysis now reflects the new Reference Case and Energy Efficiency measures in the proposed Package.
The results are complete for the SWG proposed Package Scenario.
Projected changes to retail prices are small in the Package Scenario and modest under the High Emissions case.
RGGI has small positive impacts on the economy of the region – those impacts are small, generally within two-hundredths of 1% change in economic indicators.

3. Overview of Presentation
Results for SWG Proposed Package Scenario
Stabilization through 2015, 10% reduction by 2020
Offsets and EE Measures
Retail Price Impacts (conversion of IPM wholesale price changes)
Integration of EE Investments, Costs, and Savings into REMI
Economic Impact Results
Stated as difference between how the economy performs in a given year in a reference scenario and a policy (RGGI) scenario.
Performance is gauged by changes in:
Gross State (or Regional) Product (GSP or GRP)
Employment
Personal Income

4. Retail Price Impact Analysis
IPM Wholesale (Firm Power) Prices were converted to Retail prices for Residential, Commercial, and Industrial customer classes
Conversion considers historical relationship between wholesale and retail costs to determine retail price adder.
Sources: EIA and NEPOOL, NYISO, PJM Annual Market Reports
Retail price change is used to determine impact on annual bill of typical household.
For the REMI analysis, wholesale to retail conversion maintains use of EIA/NEMS forecasts.
REMI needs consistent method and inclusion of national price trends. Relative prices are key to REMI impacts.

5. Impact on Retail Electricity Rates
Increase (%) in Retail Rates due to SWG Proposed Package Scenario
(after conversion of IPM wholesale rate impact)

6. Impact on Retail Electricity Rates
Increase (%) in Retail Rates due to SWG Proposed Package Scenario under High Emissions Case
(after conversion of IPM wholesale rate impact)

7. Impact on Typical Household Bills
Results for SWG Proposed Package Scenario
Based on annual average HH electricity bills for from EIA Electric Power Monthly.

8. Impact on Typical Household Bills
Results for SWG Proposed Package Scenario
under High Emissions Case
Based on annual average HH electricity bills for from EIA Electric Power Monthly.

9. Integration of Energy Efficiency in REMI
EE investment spending stimulates industry sectors
Costs of making EE investments
End-users’ costs
Public (SBC) costs
EE impacts end-users’ energy spending (bill impact)

10. EE Investment Spending – Industry Stimulus
IPM provides EE expenditures by end-users and public programs.
End-User expenditures – 100% allocated to EE measures and NAICS
Public Program expenditures – 60% allocated to EE measures and NAICS, 36% to administrative activities, 4% private profits.
EE Investments allocated by IPM to Res/Comm/Ind customer classes.
Investments by each class are allocated to EE measures (e.g. lighting, appliance, motors, etc.)
Each measure is mapped to NAICS industry sector

11. EE Investment – Allocation of Costs
IPM provides EE expenditures by end-users and public programs.
Out-of-pocket investment expenditures by end-users and public SBC are allocated as costs to businesses and households.
RGGI program may provide public EE program funds through public allocation set-aside.
Redirecting cost from SBC to RGGI public benefit program will reduce costs to businesses and households, improving impacts of current analysis.
Analysis considers full public cost borne through SBC charge.

12. EE Investment – End-User Bill Impacts
IPM provides output for EE GWh savings for Res/Comm/Ind classes.
Each customer class’ expenditures are reduced by MWh savings times retail price.
EE measures are considered to have a lifetime of 14 years.

13. Macro Economic Impacts of SWG Package Proposal
Summary of Results
The combined effect of the Package Scenario energy price increases and capacity investment leads to small negative economic impacts - generally below two-hundredths of 1% for GRP, Personal Income, and Employment.
The inclusion of the energy efficiency component to the Package Scenario creates overall positive economic impacts across the Total RGGI region - on the order of two- to three-hundredths of 1% for GRP, Personal Income, and Employment.
Modeling did not include the economic benefits associated with the investments in offsets.

14. Summary of Regional Economic Impacts (%)
REMI Results for
SWG Proposed Package Scenario
Regional impacts are relative to Reference Run