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A majority of energy regulators agree that reducing greenhouse gas (GHG) emissions will increase the costs of electricity and that the public is willing to pay as much as 5% more for green energy, according to a survey from the Deloitte Center for Energy Solutions.

The survey, which was completed by 60 state regulators in March and April, found that 70% of surveyed regulators believe that the cost of electricity is likely to increase next year, with 50% identifying environmental compliance as the strongest contributing factor to these increased electricity costs.

In addition, more than 80% of surveyed regulators believe that the Obama administration's proposed cap-and-trade system for carbon dioxide emissions will result in higher electricity costs in their states.

Regulators who responded to Deloitte's survey indicate that the public, for one, is willing to pay more for greener energy. The survey finds that more than half of the respondents (53.3%) believe the public would pay as much as 5% more in electricity rates to mitigate GHG emissions.

However, only 16.7% of regulators believed their consumers would accept a 10% increase in rates, compared to 29% of regulators who felt the same way last year - a phenomenon that likely reflects regulators' sensitivity to the economic difficulties facing their ratepayers.

"Regulators seem to believe that the rate-paying public supports a cleaner energy direction," says Branko Terzic, energy and resources regulatory policy leader for Deloitte and a former commissioner with the Federal Energy Regulatory Commission.

He adds that in 2009, fewer commissioners (23.3% compared to 32% in 2008), believe that consumers would not support "any increase" in rates for cleaner energy. This, Terzic says, may indicate that commissioners see higher public acceptance of the tie between power plant emissions and climate change.

"Consumers understand that some increase in electric rates tied to cleaner energy may be inevitable," Terzic notes.

Regulators also showed growing support for renewable power sources, with 42.4% ranking them as "extremely effective." Clean coal, in contrast, seems to be the most polarizing source of power generation among regulators in 2009: Only 25.4% felt it was "extremely effective," while an almost identical amount (23.7%) viewied it as "not effective at all."

SOURCE: The Deloitte Center for Energy Solutions



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