Grid operators assess low-carbon future, regardless of stay

Source: Emily Holden, E&E reporter • Posted: Friday, March 11, 2016

Two of the nation’s grid organizations are continuing to analyze U.S. EPA’s Clean Power Plan, despite a Supreme Court stay of the rule that has many of the states they operate in suspending official planning work.

Southwest Power Pool (SPP) and the Midcontinent Independent System Operator (MISO) — which spread across the middle section of the United States — said during a joint meeting yesterday that they would keep up their individual number-crunching. They also will work together to send the same message to states looking to ensure against power outages and price hikes as they shift away from coal and toward lower-carbon electricity sources under the rule.

Most states within SPP’s operating area are vehemently opposing the federal climate change plan that mandates that states cut carbon emissions from existing power plants 32 percent from 2005 levels by 2030. Under the rule, states must develop plans for how they intend to comply with their individual targets.

Before the Supreme Court decision to delay the rule, the grid operator predicted it would be costly — but still argued for states to write their own plans rather than follow campaigns by critics to “just say no” (ClimateWire, Nov, 2, 2015). Yesterday, it reiterated that message.

“In our mind, it was a lot better for a state to have something they developed instead of allowing a federal plan to be imposed on them,” said Lanny Nickell, SPP’s vice president of engineering.

After the Supreme Court stay, “some states are prevented legally from even talking about the Clean Power Plan,” Nickell said. “So we know that we can’t do anything about that, but as much as they can, if they can continue to think about it and be prepared for whatever future materializes, the better off they will be.”

Nickell noted that while some states have said they will halt planning work, it appears from E&E Publishing’s reporting that many will at least partake in regional discussions.

He said SPP has tried to stay out of the specifics of state decisions, opting not to take a side on whether states should cap emissions or aim for an average carbon rate for the power fleet, for example.

Nickell argued, however, that states might want to stay in discussions since some decisions — including on what power lines might be needed to transport less coal and more natural gas and renewable power — require years of planning.

Nickell said it’s unclear whether EPA’s timeline for states to submit plans in 2018 and start making carbon cuts in 2022 will change.

Planning for a changing future

Jordan Bakke, senior policy studies engineer at MISO, said the organization is transitioning from understanding what the Clean Power Plan means to incorporating it into the planning process and transmission development.

“Right now, we are looking at potential coal retirements out of the Clean Power Plan, how things on the renewable side would be changing and how those can be implemented into our regional processes,” Bakke said.

MISO’s next planning study will look at scenarios with and without the rule in place. The grid operator has said previously that it is used to modeling for many different outcomes (EnergyWire, Feb. 18).

“That’s because the primary thing that MISO’s seen is this trend toward less carbon generation going on into the future,” Bakke said. “Whether that means the Clean Power Plan or something else, our transmission development is designed to take that broad range of futures in and not simply plan toward the Clean Power Plan itself but plan for a future that is changing.”

“We’re seeing very large resource changes on the system, and it is incumbent upon us to plan for that,” he added.

Meeting attendees yesterday stressed that regional grid organizations will need to prepare for a changing electricity grid no matter what happens with the Clean Power Plan.

“Regardless of what happens with the states in the next 12 months or longer, regardless of what happens with the concept of the Clean Power Plan after the stay is addressed and the court has had their say on it, in the interim period, things are happening and utilities are making decisions and the generation is changing,” said Steve Gaw, SPP policy director with the Wind Coalition.

Coordinating a ‘common message’

Gaw said grid organizations may need to assess that shift regardless of whether the Clean Power Plan survives legal challenges.

“I continue to believe we need to have that assessment for the sake of understanding the impact out there on consumers and what the most cost-effective way is to address the changes that we’re seeing occur,” Gaw said.

Richard Seide with Apex Clean Energy added that “irrespective of what occurs with the stay, there is clearly a need to look at futures that involve carbon mitigation.”

SPP and MISO, as well as the PJM Interconnection in the Midwest and Mid-Atlantic, have all found that allowing interstate carbon trading — whereby a coal generator could pay to take credit for a carbon reduction made by another company — would keep costs down.

SPP predicts that regional compliance plans would be 40 percent less expensive than single-state compliance plans.

“We’ve all observed the same thing,” Nickell said. “A regional approach to compliance is much more cost-effective than a state-by-state approach.”

The majority of coal plant retirements that EPA expects under the regulation would happen near SPP’s border with MISO, Nickell said, meaning there may be “opportunity for inter-regional solutions.”

“Regardless of what happens going forward, in areas where you have significant capacity retirements, you’re going to have to find a way to address the reliability results of that,” Nickell said.

SPP and MISO are also working on a “recipe for success” for states submitting information to grid organizations to get help evaluating potential reliability concerns before they file plans to EPA, Nickell said.

“We need to coordinate and make sure we have a common message we can tell the states,” Nickell said.

This story also appears in this morning’s edition of EnergyWire.