The average U.S. electricity customer would face a 20 percent price increase in 20 years under climate legislation passed by the House last month, according to a draft analysis by the Energy Information Administration.
The House bill by Democrats Henry Waxman (Calif.) and Ed Markey (Mass.) would force electricity prices to climb to 12 cents per kilowatt-hour in 2030 -- 20 percent above EIA's 2009 projections -- under a scenario in which low-emission technology is developed on schedule and offsets are not constrained, the Energy Department agency says in the draft obtained by E&E.
Electricity prices will vary from 11 to 17.6 cents per kilowatt-hour in 2030 under six different scenarios EIA analyzed. The scenarios vary by the readiness of technology, generation costs and the availability of offsets for carbon dioxide emissions that exceed the federal cap, the draft says. The Waxman-Markey bill would cap and reduce carbon emissions by 17 percent by 2020 and 83 percent by 2050 compared with the 2005 baseline.
The current average price of electricity is about 10 cents per kilowatt-hour.
In the short term, electricity prices rise to only about 9.5 cents per kilowatt-hour in 2020, about 3 percent above "business as usual," reflecting the free allocation of emission allowances available until 2025, the report notes.
The rise in energy costs spurred by the bill will reduce household consumption by $142 (in 2007 dollars) in 2020 and will deplete consumption by $583 in 2030 under the "basic" scenario, the report says. Overall, U.S. gross domestic product will decrease by 0.2 percent in the basic case, or by about $492 billion (in 2000 dollars) from 2012 to 2030, the report says.
The draft predicts that the cost of greenhouse gas allowances will range from $32 per metric ton in 2020 to $65 per metric ton in 2030 under the basic case.
But EIA's modeling formula can only forecast up to 2030, the report says. It also doesn't account for several provisions, including the impact of financing of advanced low-emission technology, the distribution of allowances to merchant coal plants, the strategic allowance reserve, and effects of increased investment in energy research and development.
The report says the bill's clean-energy bank provision "may have the most significant potential to alter the reported results."
Other uncertainties noted by the report: the cost and public acceptance of low- and no-carbon technologies and the role of offsets whose availability will be based on decisions by U.S. EPA and international agreements. The report estimates that under the basic scenario, about 39 percent of the emission reductions under the bill would come from domestic abatement, while the rest of the 61 percent of the emission reductions would come from offsets.
EIA spokesman Jonathan Cogan said the agency plans to release a final version of the report soon.
Click here to view the draft report.
Senior reporter Darren Samuelsohn contributed.