A strategic approach to mitigating rate increases and greenhouse gas price risk.
Amber Mahone is a senior consultant with Energy and Environmental Economics (E3), based in San Francisco. Ben Haley is a senior associate with the firm, and Ren Orans is managing partner. James H. Williams is chief scientist at E3 and an associate professor at the Monterey Institute of International Studies in Monterey, Calif. The analysis in this article was based on an independent case study of Duke Energy Carolinas, which was neither funded nor reviewed by Duke. The authors are responsible for any errors or omissions.
A U.S. economy-wide cap-and-trade law to reduce U.S. greenhouse gas (GHG) emissions appeared to be a distinct possibility in 2008 and 2009. Today, the concept of implementing a national cap-and-trade program is off the table and is unlikely to be resurrected anytime soon. However, this doesn’t mean that GHG abatement is no longer of concern for electric utilities. Rather, electric utilities are facing GHG cost risk and abatement pressures in a variety of other forms, from renewable portfolio standards and energy efficiency requirements to Environmental Protection Agency (EPA) standards, such as best-available control technology regulations on coal plants—with maximum-achievable control standards expected soon.