Independent Analysis Concludes RGGI Carbon Tax Could Increase Pennsylvania Electricity Rates 3.8x

HARRISBURG – Impartial analysis from the Independent Fiscal Office (IFO) projects the Regional Greenhouse Gas Initiative (RGGI) could nearly quadruple electricity rates for consumers, said Sen. Cris Dush (R-25).

The nonpartisan IFO reviewed the Wolf administration’s outdated RGGI modeling and presented its findings to a joint hearing of the Senate Environmental Resources and Energy Committee and the Community Economic and Recreational Development Committee on Tuesday.

IFO Director Matthew Knittel said Pennsylvania could spend upwards of $781 million annually on emissions credits at the RGGI auctions – nearly four times the amount anticipated by the administration’s taxpayer-funded 2020 analysis used to justify Pennsylvania’s participation in RGGI. Knittel told the panel that the costs will be passed on to energy consumers, including residential consumers, employers, schools and other ratepayers.

The IFO analysis also concluded that emissions reductions between 2008 and 2020 for the 10 RGGI states were comparable to non-participating states.

When Gov. Tom Wolf signed the 2019 executive order that forced Pennsylvania into the regional carbon tax program, auction clearing prices – the amount energy producers pay to buy “credits” to offset their emissions – were $3.24 per short ton. At that time, taxpayer-funded analysts insisted prices would stay under $5 through 2030.

The auction clearing price set on Dec. 1, however, exceeded $13 per short ton, more than four times what the department estimated and 40% above the Sept. 8 clearing price alone.

The IFO said this spike in clearing prices casts doubt on every projection the former analysis made. For example, net generation from coal and natural gas – two sources of carbon emissions targeted by RGGI – will likely grow 16%, not the flat rate assumed by the administration, to account for increased demand.

“There’s no contest between our commonwealth’s electricity rates and those of RGGI states; even though Pennsylvanians are seeing their electrical bills rise because of the bad policies pushed by Democrats at the national level, they are still paying far less than RGGI states, which account for most of the ten highest statewide electricity rates in the nation,” said Sen. Dush. “Seniors and others on fixed incomes will bear the greatest burden of the rate increases to come because the RGGI scheme puts Pennsylvania’s energy policy in the hands of the other RGGI states, none of which come close to producing the amount of electricity Pennsylvania does.”

“The jobs we stand to lose in rural Pennsylvania in the energy industry are but the tip of the iceberg of the family-sustaining jobs we face losing as industry pulls out from our high-tax, and now high-energy prices, state,” Sen. Dush added. “This scheme will only help foreign countries, big corporations from outside of our area and the politicians they help fund to use the force of government to line their pockets.”

The administration’s effort to force Pennsylvania into RGGI is being challenged in court and could face additional legislative action.

CONTACT:    Zack Ankeny

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