NH’s RGGI deal maintains state’s energy course
But two state bills propose significant changes
New Hampshire may have agreed to extend the Regional Greenhouse Gas Initiative, which now calls to further reduce emissions by another 30 percent, but that won’t affect the Granite State.
First of all, lawmakers have to the final say on whether the state remains in the program.
Secondly, New Hampshire negotiated a deal that would keep the rate of emission reduction constant.
Third, New Hampshire rebates most of the money from the program back to ratepayers.
RGGI, a regional cap and trade program overseen by a coalition of nine Northeastern and Mid-Atlantic states since 2008, requires that power plants pay for the carbon they release into the atmosphere. How much they pay depends on an auction, where the price is driven by how much the plants need to emit and the allowable supply of carbon, which RGGI shrinks by about 2.5 percent a year until 2020.
The deal reached on Wednesday extends the agreement until 2030 and increases that reduction on the whole to about 3 percent.
You would think that the power plants would have to pay more as the supply shrinks, but it hasn’t worked that way because emissions sometimes decrease even faster. That’s due to efficiency programs partially funded by RGGI, and the retirement of coal plants, replaced by natural gas, which produces less carbon, as well as an increase in renewables like solar and wind.
Eversource might be reducing its contributions when it sells off its generation assets including the Merrimack Station, which is expected to retire or at least lower its output to that of a backup generator.
For instance, at the quarterly auction at the end of 2015, the price to emit a ton of carbon was $7.50. Last quarter (in June), it was going for $2.53.
We are “eating the surplus” energy, or “sucking up the slop,” said Robert Scott, commissioner of the state Department of Environmental Services who negotiated deal for New Hampshire.
As a result of those negotiations, New Hampshire (and Maine) has to adhere to a little less than a 30 percent reduction (29.1 percent), while other states must do more, averaging 30 percent. New Hampshire also won’t participate in a program to inflate the credits if it gets too low, Scott said.
There are details still to be negotiated this month and, whatever the outcome, lawmakers have to approve the result, but that has to do with cap and trade part of the program.
How to spend the proceeds is left up to each state.
The proceeds of the auction are divvied up to the state depending on its size. New Hampshire has gotten $120.4 million since 2008, but that number has been shrinking with the size of the credits. In 2015, the state got $24 million in RGGI proceeds. Last year it got about $14 million, and in the first half of this year, it only received $2.6 million.
But what the state received doesn’t make much of a difference on how much it spent on utility core programs that subsidize such things as weatherization program. That’s because anything after the first dollar is rebated to the ratepayers, thus about $4 million goes to energy efficiency, whether the state gets $24 million, as it did in 2015, or $5 million, which it will get if the current auction price continues.
“We are inoculated,” said Scott.
There are two bills coming before the legislature retained from last year that could have a much more immediate impact than the deal negotiated on Wednesday. One bill would withdraw from RGGI altogether. This Scott advises against since we would pay the cost of RGGI anyway, since we are part of the regional grid. It would just amount to passing up on the proceeds that would either lower electric rates or lower the bills of some customers by reducing usage.
Besides the cost to the ratepayer was 24 cents per month for an average residential customer in 2015, or less than a penny a day.
The other retained bill, HB559, would make that a total rebate for commercial customers (and eliminate commercial programs) while eliminating the rebate for residential customers, and spending more on their programs. It would also increase the percentage from 15 to 35 percent for low-income energy efficiency programs, and increasing the amount carved out for municipalities from $2 million to $5 million.
The more money that goes to energy efficiency, the better, says Catherine Corkery, director of the New Hampshire Chapter of the Sierra Club.
“We have really restricted how much money we can use from RGGI,” she said. “Other states have much more dynamic programs that a have a real impact on energy usage. Rockingham County Community Action Program has a 20-year waiting list for low-income weatherization. If we can increase the funds for that, that’s good.”
But given the shrinking pool that the state has been receiving, HB559 would mean that all RGGI funds would be directed to those programs, and none to the utility core program. Offsetting that, the PUC has imposed an Energy Efficiency Resource Standard, which should increase the system benefits charge. That program already contributes much more than RGGI does to the core programs. The EERS would more than make up for the reduction in RGGI funds.