The Edison Electric Institute held its 2009 fall legal conference in Boston on 29 October - 1 November 2008. The conference brought together more than 140 general counsels and senior attorneys serving the electric power industry.
As part of the conference's Subcommittee on Energy Supply and Environmental Issues, NERA Senior Vice President and Environment Group Head Dr. David Harrison participated in a panel discussion on the economics of greenhouse gas regulation that focused on the various proposals that have been developed to deal with climate change, particularly proposals for a cap-and-trade program. Under a cap-and-trade program, overall greenhouse gas emissions are capped and facilities are allowed to trade allowances (rights to emit). The electricity sector would be extensively affected by such a program, both in terms of the need to cover the costs of its carbon dioxide emissions and through the effects of the program on electricity and fuel prices. NERA has developed the NERA Carbon Financial Impacts Model to assess how electricity companies and companies in other sectors would be affected, including how they would be affected by different formulas to allocate allowances.
During the panel discussion, Dr. Harrison delivered a presentation entitled "Cost Containment in a US Greenhouse Gas Cap-and-Trade Program." The presentation examined methods to reduce the costs and cost volatility of meeting climate change targets with a cap-and-trade program. Concerns regarding the potential cost of the program and how costs might be reduced and volatility minimized are important in the ongoing deliberations on potential cap-and-trade programs both in Congress and in various regions.