Energy Transition Portfolio Financial Impacts

The consulting team, working with support and input from the UMA staff developed a set of key financial metrics to understand the implications and relative cost-effectiveness of the Solutions and Portfolios under consideration. The full set of financial metrics and related assumptions are included in the Fovea CAP modeling excel workbook, which has been provided to UMA as a separate deliverable. The following table provides an overview of the Energy Transition Portfolio Cash Flow Summary. A life-cycle cost comparison between the BAU case and the Energy Transition Portfolio is included in Figure 23.


Cost of Utility Services

Table 8: Energy Transition Cashflow Summary

(Then Current Dollars X 1,000)

Forecast >
2025 2030 2035 2040 2045 2050
Purchased Electricity $5,760 $3,407 $2,224 $16,480 $23,190 $26,612 $27,652 $30,513
Total Stationary Fuels $14,105 $12,956 $11,276 $3,746 $779 $874 $891 $915
Natural Gas Cost $10,393 $9,328 $8,367 $2,642 $332 $338 $295 $319
ULSD Cost $1,348 $1,084 $1,067 $268 $0 $0 $0 $0
LNG Cost $2,364 $2,544 $1,008 $2 $0 $0 $0 $0
RFO Cost $0 $0 $834 $834 $447 $536 $596 $596
Other Commodities $712 $1,149 $1,240 $1,343 $2,181 $2,816 $3,421 $3,804
Non-Commodity O&M $2,698 $4,309 $5,381 $6,002 $7,287 $3,031 $4,290 $3,327
Carbon Offsets $0 $0 $0 $515 $142 $124 $139 $177
Renewable Energy Credits $0 $0 $0 $1,785 $1,667 $1,147 $574 $0
Total Cost of Energy $23,275 $21,821 $20,121 $29,871 $34,604 $34,608 $36,967 $38,736


Capital Expenditures

(Then Current Dollars X 1,000) 2019 2020 - 2024 2025 - 2029 2030 - 2034 2035 - 2039 2040 - 2044 2045 - 2049 2050
CAPEX $0 $149,542 $227,475 $270,648 $14,852 $10,613 $2,236 $5,695



Social Cost of Carbon (Carbon Tax)

As of the writing of this report, there is no economy-wide tax or fee imposed on UMA for its GHG emissions. Outside of the United States, many countries have enacted some form of a carbon tax or fee. Within the United States various states and regions have or are considering some form of a carbon tax or Emissions Trading Systems (ETS). A carbon tax would directly set the price of carbon by defining a tax rate on emissions. An ETS, or cap-and-trade system, would cap total emissions levels and allow those with low emissions to sell their excess emissions capacity to higher emitters. The trading systems would establish a market price for greenhouse gas emissions.

A Social Cost of Carbon (SCC) is a long-range planning tool often used by governments and other large organizations to calculate the financial cost to society, even if no direct fee is imposed. The SCC is particularly useful when trying to understand the long-term environmental and financial risks associated with various infrastructure decisions. The economic implications of taxing pollution are well understood, but political viability remains the primary challenge, making it difficult to determine what specific value to use in this analysis. The World Bank State and Trends of Carbon Pricing 20207 published the current nominal carbon tax rates by countries that have implemented carbon pricing initiatives, ranging from $25/ton (UK, Denmark) to $119/ton (Sweden).

This study includes a SCC starting at $50 / MTCO2e with a 5% annual escalation rate. The SCC is not assuming any specific legislation, tax or ETS will be enacted. However, when included in the financial metrics, the SCC does provide a good proxy for a variety of potential taxes or ETS scenarios that UMA could be subjected to in the future.

Social Cost of Carbon – EPA and other federal agencies use estimates of the social cost of carbon (SCCO2) to value the climate impacts of rulemakings. The SC-CO2 is a measure, in dollars, of the long-term damage done by a ton of carbon dioxide (CO2) emissions in a given year. This dollar figure also represents the value of damages avoided for a small emission reduction (i.e., the benefit of a CO2 reduction).8


Total Cost of Utilities including a Social Cost of Carbon

Life-cycle cost comparison - BAU vs. Energy Transition Portfolio


Key Insights – Life-cycle cost comparison

  • Clear shift from Stationary Fuels to Purchased Electricity in the mid-2030s. Electricity costs double while Stationary Fuels are almost eliminated.
  • Cost of Renewable Energy Credits peak in the 2030s as electricity demand grows and the grid is not yet 100% renewable.
  • CAPEX is front-loaded over the first 15 years of the plan.
  • Non-Commodity O&M costs associated with steam equipment is avoided after ~2035
  • Total Cost of Energy is 10 to 20 Million dollars lower than BAU in the later years.
  • Commodity Purchases are lower in the Energy Transition Portfolio, but only modestly since electricity is more expensive on an MMBTU basis than fossil fuels.


The life-cycle costs, including a Social Cost of Carbon are roughly the same in both scenarios based on the current commodity forecast and project cost assumptions. See Appendix I for additional details.


Sensitivity Analysis

A sensitivity analysis was performed on commodity pricing to understand how significant commodity fluctuations beyond the current forecast will affect the financial metrics produced by this study. The BAU gets relatively more expensive as the price of the cogeneration fuels and the Social Cost of Carbon increase. The Energy Transition gets relatively more expensive as the price of electricity increases. Additional details on this sensitivity analysis can be found in Appendix J.