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DE Generators Proposal for Transition to 100% RGGI

Allowance AuctionAmended Generators Proposal

March 10, 2008

SCR28 Workgroup Committee

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SCR 28 “Resolutions and Progress” DE Generators Proposal for a Transition to a 100% Auction

February 6, 2008 Generators Original Proposal for transition to

a 100% Allowance Auction

50% Auction with a 50% Allocation 50% Auction with a 50% Allocation

10% annual reduction to zero 10% annual reduction to zero

100% Auction 100% Auction 20142014

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Key Concepts DE Generators Proposal for a Transition to a 100% Auction

Transition to a 100% CO2 RGGI allowance auction in DE is recommended

Transition period – five years mitigate new program implementation risk and

customer price instability over “two-term” compliance period

mitigate the leakage issue in Delaware. Transition includes allocation, auction, and

DE-based GHG reduction projects Newly formed GHG Advisory Board to

evaluate and implement DE based projects.

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What’s New DE Generators Proposal for a Transition to a 100% Auction

GHG Reduction Projects to be Delaware based Solicit projects through open RFP process Projects can include, but not limited to generator and

generator-affiliated facilities as well as other projects Allocation to Generators reduced annually by 5% to

fund GHG Reduction Projects (via auction process) GHG Reduction Advisory Board Recommended

3 – State of DE (DNREC, Legislators) 3 – Generators 3 – DE Based Environmental Advocacy Groups

All Auctions managed by DNREC, administrative funding TBD in regulation process

All Auction funds to SEU or similar energy efficiency management program

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Distribution of Proceeds as Allowances DE Generators Proposal for a Transition to a 100% Auction

Allowance Vintage

DNREC Set Aside

Program Admin

Allowances for Auction

%

Allowances for

Generator Allocation

%

Allowances for Auction

GHG Reduction

Project

%

2009 per DE Reg. 50 45 5

2010 60 35 5

2011 70 25 5

2012 80 15 5

2013 90 5 5

2014 and Beyond

100 or TBD

0 0

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Program Benefits

Transition reduces program implementation risk, consumer price risk and leakage impacts

Five year duration needed to cover two compliance periods

GHG Reduction Project provides real CO2 reductions in DE

Advisory Board assures fair public process; includes State Officials, Generators, and Environmental Advocates