NEW YORK Jan 28 PJM, the largest U.S.
electricity grid operator, said on Wednesday that a study it
commissioned indicates that Congressional proposals to reduce
carbon dioxide emissions from power plants could boost power
prices in its region by between $5.9 billion and $36 billion
The Mid-Atlantic/Midwest grid operator said the study also
showed energy efficiency programs and additional wind power
would cut that price hike by billions of dollars and reduce CO2
emissions by millions of tons.
The study, by PJM Senior Economist Dr. Paul Sotkiewicz and
the market simulation department, concluded wholesale power
prices would climb from $7.50 per megawatt hour to $45/MWh in
Reducing electric consumption by 2 percent to 10 percent
could lower prices between $3/MWh and $13/MWh, or between $3
billion and $17 billion per year, and lower CO2 emissions
between 12 million and 60 million tons in 2013.
Installing 15,000 megawatts (MW) of wind power by 2013,
about a third of the grid's proposed wind projects, would cut
CO2 emissions by nearly 35 million tons and reduce wholesale
prices by $3.55 billion to $4.74 billion, the study found.
The study used models to simulate the impact of
cap-and-trade or carbon tax policies. It based its calculations
on projected carbon prices within ranges identified by
government agencies from $10 to $60 per ton and on typical
residential use of 750 kilowatt-hours (kWh) per month.
About 40 percent of new generation projects proposed in PJM
are wind power farms.
CEO Terry Boston said in a release that PJM was not trying
to influence policy, but believed "as the largest grid in North
America that we're in a good position to demonstrate how
climate control proposals will affect ... prices."
NATURAL GAS VERSUS COAL
The study said CO2 prices would have to reach $40/ton
before natural gas combined cycle power plants would be run in
place of coal-fired units on a large scale. At $40 a ton,
wholesale electric costs would rise by about $30/MWh and boost
residential prices about $22.50 a month.
Coal, which is much cheaper than other fossil fuels such as
natural gas, generates about half the electricity used in the
United States. But a coal plant produces about twice as much
CO2 as a natural gas-fired plant, and CO2 is a greenhouse gas
associated with global warming. A 1,000 MW coal plant produces
about 6 million tons of CO2 per year.
PJM said that at the end of 2007 there were about 66,000 MW
of coal-fired capacity and 23,000 MW of combined cycle gas.
PJM operates a grid serving 51 million people in Delaware,
Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey,
North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West
Virginia and the District of Columbia. It also administers a
$20 billion wholesale power market with a generating capacity
of more than 168,000 MW.
(Reporting by Scott DiSavino; Editing by David Gregorio)