The Plan to Kill Off Electricity, The RGGI Plan

by Dan McKay

Apr 28

  • RGGI sells allowances. Each allowance represents a ton of C02 emissions from power plants. The power plants expected to purchase these allowances are participants in RGGI. They become participants by decision of State Legislatures who enroll in RGGI by writing a law to that effect.
  • All natural gas-fired and oil-fired plants that have nameplate capacity over 25 megawatts are required to purchase allowances from RGGI and include the cost in their hourly production bid offers to the ISO-NE wholesale electricity market. Maine has 6 such operating plants.
  • RGGI is designed to reduce C02 emissions from power plants by how the allowances are offered to plants. Each plant is ALLOWED only a certain number of allowances which are sold in 3-month time periods by auction. The number of allowances is reduced annually, thus reducing ALLOWED plant production.
  • As expected, each allowance reduction has a corresponding price increase in auction bids. Lower supply equals higher demand.
  • The RGGI price has gone from $1.86 per allowance in 2010 to $16.00 in 2024 ( 1st quarter)
  • The 5 Maine natural gas-fired plants and 1 oil-fired plant purchased 11.8 million allowances during the initial 3-year period (2008 to 2010) and only 6.3 million for the latest 3-year period (2021 to 2023).
  • The allowance cap affects production by lowering it. The lower production affects plant revenue. To maintain a revenue, plants bid the allowances higher. 
  • Natural gas-fired plants are critical to Maine's electricity reliability even as the combined qualified renewable plants sited in Maine produce the same amount of electricity that Maine consumes. Maine will always need fossil fuel plants no matter how many qualified renewable plants are built in Maine, on or offshore.
  • The question is: How is this going to end? Are Maine people going to fall further into energy poverty so that RGGI can eventually cut emissions to zero? No more fossil fuel plants? Are we to live with part time electricity?Does anyone seriously think the price of electricity will go down with the current 0 emission plan?