RGGI Draft Model Rule General Comments from Environment Northeast Regional Greenhouse Gas Initiative Stakeholder Meeting Hartford, CT May 2, 2006 Derek Murrow Director, Policy Analysis

General Issue 1 - The Cap Level is Set High Initial Cap Level is ~6.6% Above 2004 Emissions

RGGI Stakeholder Meeting, Hartford, CT, May 2, 2006 General Issue 2 – Plant Exemptions without an Equal Reduction in Cap Level Issue:  Exemptions for Self-Generators (industrial units) that sell less than 10% of their power to the grid  Biomass exemptions (up to 50% fossil input could be exempt) Goal: Ensure a binding cap in the early years of the program and avoid loopholes for fossil combustion Recommendation:  States should voluntarily reduce their cap level (apportionment) based on average annual emissions of exempted units  Biomass emissions should be calculated based on the proportion of fossil fuel input to any dual-fueled plant, except for de minimus use of fossil (i.e. XX tons CO 2 per year), not allowing an up to 50% fossil loophole; annual reporting should be required of all biomass facilities over 25 MW

RGGI Stakeholder Meeting, Hartford, CT, May 2, 2006 General Issue 3 – Early Reduction Credits that are Additional to the Cap Issue: Early Reduction Credits are interpreted to be additional to the cap (further inflation) Goal: Ensure a binding cap in the early years of the program Recommendation: Have the states provide the same incentive for early reduction through an allocation from within their existing cap level, as stated in the MOU

RGGI Stakeholder Meeting, Hartford, CT, May 2, 2006 General Issue 4 – Consumer Benefit or Strategic Energy Allocation Issue: The Strategic Energy definition is vague and we are concerned that allowances could be used to support projects of little relevance to RGGI or which negatively impact the environment Goal: Use the value of allowances to reduce the cost of the RGGI program on the region’s electricity consumers Recommendation: clarify that all of the “consumer benefit or strategic energy purpose” allowance value must be used to:  Reduce the costs of the RGGI program to the state’s electricity ratepayers (would not exclude new supply side technologies);  Provide additional benefits for projects or activities that would not have occurred anyway and not replace existing programs or investments; and  Support programs and activities that do not pose a significant risk to human health and the environment.

RGGI Stakeholder Meeting, Hartford, CT, May 2, 2006 Contact Information Derek K. Murrow Director of Policy Analysis Environment Northeast 101 Whitney Ave. New Haven, CT (203) Rockport, ME – Boston, MA – Hartford, CT