Oil report

NY:RGGI cap and trade adds under $1 to power bills

NEW YORK, Dec 18 (Reuters) - The U.S. Northeast’s cap and trade market on the main greenhouse gas should cost New York residents less than $1 a month and many of them will eventually see savings, a state official said.

The program, which essentially charges power plants in the region to pollute carbon dioxide, should cost average New York residents 78 cents per month on their power bills, said Peter Iwanowicz, the director of the climate change office for New York’s Department of Environmental Conservation.

New York hopes to raise funds through the cap and trade program that will lead to energy efficiency projects such as fixing drafty windows and doors in homes and other programs.

“If you are taking advantage of these things you actually have the ability to cut your bills,” said Iwanowicz. He said the programs could eventually cut costs for residents by $30 per year.

New York is the largest carbon dioxide polluter in the Regional Greenhouse Gas Initiative, a group of 10 states in the U.S. Northeast and mid-Atlantic that formed the cap and trade market on the emissions. The states will begin regulating the emissions from power plants in January and have a goal of cutting output of the gas 10 percent by 2019.

RGGI is a potential model for a national greenhouse gas cap and trade program which President-elect Barack Obama and politicians want to enact.

Under the RGGI pact, power plants must hold permits for every ton of carbon dioxide they emit. Unused permits can be sold in the market, a feature that is expected to spur the companies to cut emissions. To distribute the permits, RGGI is holding quarterly auctions for power plants and speculators.

Iwanowicz said the estimate of the impact on bills was based on the permits trading for about $2 to $3 per ton, which is much less than greenhouse allowances trade for in Europe, which has been trading them since 2005.

In RGGI’s first auction held in September, permits went for $3.07 per ton. The results of its second auction are expected to be released on Friday.

New York, which did not participate in the first auction, expects to generate $40 million in proceeds in the auction which was held on Wednesday. In addition to energy efficiency the funds are expected to go to alternative energy programs.

Separately on Thursday, the New York Power Authority which is the country’s largest state-owned power group, said it expects to pay up to $32.6 million for the cost of emissions credits in 2009. (Reporting by Timothy Gardner; Editing by Christian Wiessner)