Power generators hop on carbon price bandwagon

Source: By Rod Kuckro, E&E News reporter • Posted: Sunday, March 1, 2020

The Electric Power Supply Association’s announcement yesterday was driven in part by the Federal Energy Regulatory Commission’s controversial December action setting new rules for competition in the PJM Interconnection, EPSA President and CEO Todd Snitchler said during an interview.

Critics have cast FERC’s order in the PJM Interconnection as harming state and regional efforts to limit carbon emissions and encourage investments in clean energy such as renewables and storage.

EPSA members “support efforts to combat climate change through transparent, open, and nondiscriminatory competitive markets, such as an economy-wide price on carbon,” the group said in a statement yesterday.

EPSA’s announcement marks the second time this week a large energy group has stepped up publicly to voice support for climate action of some sort. Earlier this week, the American Public Power Association, made up of 2,000 community-owned electric utilities, agreed for the first time that Congress needs to take action to address climate change (Energywire, Feb. 26).

PJM is also mulling how to react to its member states moving forward with curbing carbon emissions. The grid operator, which oversees the nation’s largest electricity market, has formed a task force that is weighing the merits of adjusting rules to account for various carbon-pricing scenarios (Energywire, Feb. 25).

EPSA emphasized in a release that its position “comes amid growing consensus from a variety of stakeholders including industry participants, economists, and policymakers that market-based solutions such as carbon pricing are the most effective way to achieve deep decarbonization” without sacrificing economic growth.

“We want to be a part of the discussion because our members represent more than 150,00 megawatts of generation of all varieties, including emitters and no-emitting resources,” Snitchler said.

Of the 150,000 MW of generation in its portfolios, just 6,000 MW does not emit CO2. Most of EPSA members’ power plants are coal- or natural gas-fired.

EPSA members are aware of various state actions to address climate change, and “having a set of rules that allows them to know how to invest is the way for the market to drive best outcomes at lowest costs. We’ve held that view for 20-plus years,” Snitchler said.

EPSA members include NRG Energy Inc., LS Power Development LLC, Tenaska, TransAlta Corp., Vistra Energy Corp., Competitive Power Ventures Inc. and Calpine Corp.

BP Energy Co. and Shell U.S. are also members. Both are making aggressive pledges to curb carbon dioxide emissions.

BP earlier this week said it was quitting three U.S. oil and natural gas groups because of conflicts in climate change policy “that cannot be reconciled” (Greenwire, Feb. 26).

EPSA Chairman and LS Power CEO Paul Segal said market-based solutions to address carbon emissions “would eliminate the inflated costs to customers of resource-specific subsidies while incentivizing companies to find the most efficient solutions.”

“Electric-sector CO2 cap-and-trade programs, like [the Regional Greenhouse Gas Initiative] or California’s program, are steps in the right direction,” Segal said.

Snitchler took the helm of EPSA in April of last year after a stint as vice president for market development at the American Petroleum Institute since 2017. Prior to API, Snitchler was chairman of the Public Utilities Commission of Ohio from 2011 until 2014.

EPSA is “not trying to fight state policy goals, we’re trying to find the most efficient and cost-effective way to help them implement those. A centralized market is the way to do that,” he said.

“Would it be more efficient to have a national economywide price on carbon? Yes. Are we there today? No. So regional discussions is where we find ourselves. Both are operating in tandem,” Snitchler said.

EPSA, he added, is trying to stay away from any political implications associated with the carbon and climate change debate or whether Congress or the White House will change hands.

“If people perceive that you are not willing to have that conversation, that leaves you out of the discussion. So this puts us squarely in the center of the discussion” on climate, he said.

“There’s no carbon price today — but there isn’t until there is.”