Massachusetts Governor Mitt Romney’s decision to withdraw from a controversial energy pact correctly reflects the plan's risk of significantly higher energy prices, and New York Governor George Pataki should reconsider those risks as well, Business Council President Daniel B. Walsh said in a December 16 letter to the Governor.
New York cannot afford to implement the Regional Greenhouse Gas Initiative (RGGI) without effective safeguards against significant increases in the cost of electric power, Walsh wrote.
The RGGI proposal would raise electric rates by requiring power plants to reduce carbon-dioxide emissions. Supporters of the plan say it is a necessary step in reducing global warming. Environmentalists have said the plan would have no measurable impact on global temperatures.
“New York’s business community cannot accept the risk of significant electric power price increases on top of our already high prices—average industrial prices one third and commercial rates nearly 60 percent above the national average—and our growing level of state-imposed costs on the electric power sector,” Walsh wrote.
The Council has asked Governor Pataki to adopt a a "circuit breaker" or "safety valve" mechanism as a necessary part of the RGGI proposal. Those mechanisms would, when the price of energy credits reach a certain level, trigger a pause in the regional emissions cap or would allow generators to purchase more credits at a set price.
“Apparently, some RGGI advocates do not have the courage of their convictions—arguing on the one hand that the program will be a net economic benefit for participating states, and on the other hand arguing against any type of cost cap,” Walsh wrote.
The Council remains opposed to the RGGI program but believes the initiative has highlighted other approaches to carbon dioxide emission reductions that should be considered at the state and regional level, Walsh wrote.
“These include improving and expanding our energy infrastructure, seeking cost-effective emission 'offsets' and promoting the development of cleaner power production technologies,” Walsh wrote.