A typical monthly electric bill could increase by $27 as a consequence of proposed climate change legislation in Washington, according to a new analysis by ERCOT.
Released May 12, the report projects the cost of reducing carbon emissions back down to 2005 levels by 2013. It included assumptions for future natural gas prices, the level of new wind generation construction and increases in carbon allowance costs.
The report did not account for “scarcity pricing” — that is, the price spikes that frequently occur in an important segment of the wholesale market when supply runs tight — and so may have underestimated some costs. However, the report also may have overstated other costs — such as the price of carbon allowances — and did not properly account for energy efficiency efforts, according to environmental groups.
If carbon allowance costs rise to between $40 to $50 per ton, the cost of wholesale power would increase by $10 billion — and a typical consumer bill would go up by $27, according to the report. Under different scenarios, bills presumably would increase by twice that much or by as little as $17 or $22, according to the report.
The report was conducted at the request of PUC chairman Barry Smitherman. Quoted in The Dallas Morning News, Smitherman said: “I”m more concerned about climate change legislation than I am about climate change.”