CONCORD, N.H. — New Hampshire's Senate is backing a 10-state regional effort to cut greenhouse gas emissions.
The Senate voted 16-8 yesterday to implement the Regional Greenhouse Gas Initiative known as RGGI, but to revisit the initiative if Congress enacts a federal program. The House next considers changes made to the proposal, especially on how much money would go into a fund to promote energy efficiency.
Gov. John Lynch believes the initiative will help New Hampshire's environment and economy.
The bill adds New Hampshire to the other New England states, New York, New Jersey, Delaware and Maryland in a market-based, "cap and trade" program to reduce carbon dioxide emissions from the region's power plants.
The governors of the 10 states have signed a memorandum of understanding agreeing to the initiative. It is a regional plan, but each state must adopt its own laws and regulations. States in other regions are considering similar plans.
Under RGGI, a regional carbon dioxide emissions cap would be put in place for large fossil fuel-fired power plants beginning in 2009. Allowances would be issued equal to the total cap and apportioned to the participating states. Utilities would have to buy enough allowances within three years to cover their emissions. Since the number of allowances is limited by the regional cap, overall emissions are expected to be reduced.
New Hampshire's cap would be 8.6 million tons per year out of 188 million tons emitted by the 10 states. Affected power plants in New Hampshire would be: Schiller Station in Portsmouth, Newington Station and Newington Energy LLC, both in Newington, Merrimack Station in Bow, and Granite Ridge in Londonderry.
Other types of allowances also are part of the plan. For example, capturing methane gas at a landfill also reduces carbon emissions. Also under consideration is using forestry management to reduce carbon emissions through techniques as simple as planting trees.
The money utilities pay for the allowances would go into a state-regulated fund to improve energy efficiency. Money from the sale of allowances above a certain threshold would go back to electric ratepayers.
Critics said RGGI unfairly shifts costs onto ratepayers, especially businesses. Businesses wanted a lower threshold than either the House or Senate propose, while environmental groups wanted a high threshold to build a bigger fund.
"This is a tax on dirty air," said Senate Republican Leader Ted Gatsas said. "At some point, businesses are going to start to leave."
But Webster Democrat Harold Janeway said rates will rise even more if nothing is done to promote energy efficiency.
"If we don't invest in energy efficiency, the price will be higher," he said. "When you don't do something you ought to, you pay a procrastination penalty."
The House proposed an initial threshold of $12 per ton while the Senate set its 2009 mark at $6 per ton. The threshold rises over time in both versions to 2015. After 2015, all proceeds go into the fund.
The Senate defeated an attempt to set the threshold at $2 — a rate business groups advocated — and an attempt to set the starting rate at $4 with $1 annual increases until 2018. The Senate also rejected a move to use the fund to pay for $250 million in borrowing to upgrade electric transmission lines in the North Country so more renewable power could be developed in the region.
State environmental officials envision a wide range of uses for the money that include cooling and heating efficiencies. For example, money could be used to help insulate homes or to buy wood stoves or more efficient furnaces.
New Hampshire's electric users will pay higher rates regardless of New Hampshire participating in RGGI. That's because New Hampshire buys about half its power from a wholesale market whose rates will rise as other states' power producers buy RGGI allowances and pass on the costs to ratepayers.
If the state does not join the initiative, electric users would lose the benefit of a share of the allowances going into an energy efficiency fund whose aim is to lower both carbon emissions and energy consumption over time.
Critics argue nothing prevents lawmakers from raiding multimillion dollar fund created by the bill to pay for other state spending — which would undo future savings on rates.
