Legislative analysts projected this year that the state could earn $80 million or more through the six auctions if the allowances sold for $2 to $3 each. Each allowance permits the holder to release a ton of carbon dioxide.
Under legislation approved this year, 46 percent of the auction proceeds will be spent by the state to help consumers reduce their electricity bills through such steps as improving home insulation, upgrading to more efficient furnaces and installing compact fluorescent lightbulbs. Nearly a quarter, though, will go directly to ratepayers, at least partially offsetting expected rate increases resulting from utilities being charged to emit a gas they have been free to release until now.
Jonthan Schrag, executive director of the Regional Greenhouse Gas Initiative, the multistate group running the auction, said analysts have predicted that electricity customers may have to pay $12 to $18 more per year because of the auctions.
But a study for the state Department of the Environment projects that Maryland customers might lower their bills by $22 per year as a result of the new energy-efficiency programs.
Critics still worry that the states' efforts to clamp down on carbon dioxide from power plants could drive up costs of electricity for Maryland consumers.
They also point out that neighboring states such as Pennsylvania and Virginia are not participating in the regulatory effort, and power plants could sell electricity to customers in Maryland without having to pay for their emissions.
Michael C. Powell, a lawyer for some of the state's large manufacturing firms, said his clients - large power users - are worried about even small rate increases.
Powell also said he was concerned that the cost of complying with Maryland's restrictions on carbon dioxide may discourage construction of new power plants in the state just when experts have warned there could be brownouts and energy shortages several years from now.
Matthias Ruth, who oversaw the study of the auction's effect on Maryland, acknowledged that it may cause a small increase in electric rates, at least at first. State lawmakers directed that a portion of the proceeds also go to helping low-income residents, who are least able to afford even slight increases in heating and lighting costs.
"But if we didn't do something about climate change, it's also the low-income households who are going to suffer the most," said Ruth, director of the University of Maryland Center for Integrative Environmental Research.
"It's going to be the elderly, sick and poor in less-insulated homes who are going to suffer from the heat waves or ice storms."
