On November 13th and 14th, the Clean Energy Group (CEG) held its last meeting of the year in
Washington, D.C. Representatives from industry, government and the non-profit
sector were invited to speak to CEG members on topics ranging from integrated gasification
combined cycle (IGCC) and new plug-in hybrid technologies to perspectives on the evolving
climate change legislation debate.
One of the highlights of the meeting was a discussion led by Hugh Wynne, Senior Research
Analyst at the investment research firm Bernstein Research. Mr. Wynne presented
the results of his analysis of CO2 cap-and-trade legislation pending in Congress and the
implications of such a policy for electric utilities. He found that utilities'
earnings will depend on the allocation scheme-whether allowances are allocated for free to
industry or auctioned. He expects unregulated entities to include the value of
allowances in the wholesale electricity price, even though the companies will receive the
allowances free of charge, and consequently these companies will experience an increase in
profits. On the other hand, if allowances are auctioned, electricity prices will increase
and unregulated companies with nuclear and renewable generation will see their margins expand
since they will not have to purchase the allowances their fossil-based competitors will be
obligated to buy. According to Wynne, the overall value of the allowances under
a carbon cap-and-trade program, assuming an allowance price $25 per metric ton, would be $59
billion per year-more than the combined annual earnings ($45 billion) of all of the
investor-owned utilities in the country.
Founded in 1997, The Clean Energy Group is a coalition of electric generating and electric
distribution companies that share a commitment to responsible environmental stewardship.
The mission of the Clean Energy Group is to support and enhance the efforts of
its members in understanding state and federal legislative, regulatory, and policy
developments in the environmental and energy areas.
M. J. Bradley & Associates provides administrative and technical services to both the
Clean Energy Group and the Clean Air Policy Initiative.
