Base Case Assumptions for Economic Models
following list of assumptions will be used in the Study of
Economic and Energy Impacts of RGGI Participation conducted
by the University of Maryland (UMD) for the Maryland Department
of the Environment (MDE). These will be utilized for several
models: two market models -- Resources for the Future's (RFF) HAIKU
Model and Johns Hopkins University's (JHU) Oligopolistic
Power Market Model -- and Towson University's (TU) economic
welfare model, IMPLAN.
appreciate the comments provided by stakeholders on the earlier
draft assumptions by the 9:00am September 25, 2006 deadline.
All comments have been documented. These will be summarized
in the final report and utilized where appropriate in the
other parts of the study (e.g., lists of alternative scenarios
recommended for future study, description of other considerations
and limitations, etc). Additional opportunities for input
on the study are described in the stakeholder
September 29, 2006
is a perfect competition model and JHU can simulate either
perfect or imperfect competition.
JHU model can be nested within HAIKU model, taking HAIKU
capacities as boundary conditions. The JHU model
represents four transmission constrained zones within Maryland
economic simulation will consist of the following years:
2010, 2015, 2020, 2025.
will be three seasons (for the RFF and JHU models only):
(October, November, April, March)
(December, January, February)
for fossil fuels (including international oil) and nuclear
power will come from the Annual Energy Outlook (AEO) 2006
for renewables will use the AEO 2006 as a starting point,
National Labs data will supplement for certain fuels (e.g.,
biomass and wind).
to costs, there are two types of regions to be considered:
regulated or market-based with
(marginal cost-based for wholesale, average of marginal
costs for generation for customer distribution costs).
following regions will be modeled as part of RGGI:
RGGI States: ME, VT, CT, NH, NY, NJ, DE
RGGI States: MA, RI (to be included in the study)
model is national model; JHU model is PJM-based (PA, NJ,
RGGI Allowances and Emissions Accounting
the Clean Air Interstate Rule (CAIR) and Clean Air
Mercury Rule (CAMR) policies in the baseline and the
Title IV cap on SO2 emissions outside the CAIR region.
primary federal policy to encourage use of renewables
to generate electricity is the Renewable Electricity
Production Tax Credit (REPC).
policy currently provides for a 1.9 cent per kWh tax
credit for qualified renewables for the first 10 years
of operation with the credit escalating over time to
account for inflation (2005 $). Uncertainty in REPC
will be taken into account by applying appropriate
Environmental Policies (Maryland Healthy Air Act):
emissions restrictions on NOx, SO2 and Mercury provided
trading of emissions for NOx and SO2 only.
firms may sell unused CAIR (NOx) and Title IV (SO2)
allowances out of state.
Renewable Portfolio Standards to Force Renewables to
outside of Maryland, use NEMS AEO 2006, renewable portfolio
Maryland, use Exeter Associates and Princeton Energy
Resources International report (“Inventory of
Renewable Energy Resources Eligible for the Maryland
Renewable Energy Portfolio Standard”).
Renewable Tax Credit will be represented.
growth for electricity
is to take 25% of allowance value and apply it to public
benefits, unless stated otherwise by State policy (e.g.,
Vermont 100%). It is assumed that all of the funds will
go to energy efficiency efforts unless stated otherwise
by State policy.
remaining 75% is given away according to historic output
at the generating unit based on a previous year’s
default RGGI formulas will be used for completeness.
will be counted only from electric power generation for
sale to the market. CO2 emissions associated with electricity
for own use (customer side of the meter) will not be counted.
study will not model industrial facilities that generate
their own power.
AEO 2006 values unless specific rates for Maryland are
of Power from Canada
only planned and approved transmission capacity investments
2010, assume a conservative (i.e., a few percentage points)
growth in transmission capacity; this rate will be determined
from appropriate sources (e.g., AEO). Additionally, consider
transmission investments which have yet to be approved
but are in the planning stages and have a relatively high
chance of completion.
of the US Greenhouse Gas Policy
from Canada will be exogenously determined.
policy of no caps on greenhouse gas emissions assumed to
remain in effect.
Emissions caps: caps will reflect emissions from grid-connected
Allowance Price Caps and Offsets: will follow the model