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Recent Reports

Dominion Virginia Power and Clean Power Plan Costs: A brief review of the Dominion Power 2015 Integrated Resource Plan compliance cost estimates

William Shobe
Dominion Virginia Power's 2015 Integrated Resource Plan filed with the State Corporation Commission presents cost estimates for complying with the proposed federal regulations, known as the Clean Power Plan (CPP), that force reductions in greenhouse gas emissions from existing power plants. The IRP incorrectly attributes to the CPP costs that would occur with or without the CPP. This and other modeling choices result in substantially overstated estimates of compliance costs.

Report on Appendix A-1 of the Virginia Energy Plan:
Impacts of Proposed Regulations under Section 111(d) of the Clean Air Act

William Shobe
This report reviews the Virginia Center for Coal and Energy Research cost estimates for complying with proposed federal rules limiting greenhouse gas emissions from existing power plants. The VCCER report contains a number of serious errors and omissions, greatly limiting its usefulness in evaluating state policy options. Generally, the report greatly overstates the costs of complying with new federal rules on greenhouse gas emissions.

See VCCER's reply and a brief rejoinder here. [A more detailed, but somewhat tedious, rejoinder is here.]

Price and Quantity Collars for Stabilizing Emission Allowance Prices: An Experimental Analysis of the EU ETS Market Stability Reserve

Charles Holt and William Shobe
This paper reports the results of a laboratory experiment with financially motivated participants that is used to compare alternative proposals for managing the time path of emission allowance prices in the face of random firm-specific and market-level structural shocks. In this setting, market performance measures such as social surplus are enhanced by the use of a price collar (auction reserve price and soft price cap). Comparable performance enhancements are not observed with the implementation of a quantity collar that adjusts auction quantities in response to privately held inventories of unused allowances. [Published in the Journal of Environmental Economics and Management, Vol. 76, pp. 32-50.]

Virginia Local Tax Rates: 2014

John Knapp and Steve Kulp
This is the thirty-third edition of the Cooper Center annual publication on tax rates levied by Virginia local governments.

Elements of emission market design: an experimental analysis of California's market for greenhouse gas allowances

William Shobe, Charles Holt, and Thaddeus Huetteman
We use a set of economic experiments to test the effects of some novel features of California's new controls on greenhouse gas emissions. The California cap and trade scheme imposes limits on allowance ownership, uses a tiered price containment reserve sale, and settles allowance auctions based on the lowest accepted bid. We examine the effects of these features on market liquidity, efficiency, and price variability. We find that tight holding limits substantially reduce banking, which, in turn reduces market liquidity. This impairs the ability of traders to smooth prices over time, resulting in lower efficiency and higher price variability. The imposition of holding limits in the allowance market may increase the likelihood of the market manipulation that they were intended to prevent. [Published in the Journal of Economic Behavior and Organization, Vol. 107, pp. 402-420.]