Energy Committee Update
August 24, 2017
Staff Contact: Darren Suarez
RGGI States Announce Proposed Program Changes
The RGGI states proposed a regional cap trajectory that will provide an additional 30% cap reduction by the year 2030, relative to 2020 levels. The proposed regional program changes include the addition of an Emissions Containment Reserve (ECR) wherein states can withhold allowances from auction if emission reduction costs are lower than projected. At this time, Maine and New Hampshire do not intend to implement an ECR.
Details as reported by RGGI:
- A regional cap of 75,147,784 tons of CO2 in 2021, which will decline by 2.275 million tons of CO2 per year thereafter, resulting in a total 30% reduction in the regional cap from 2020 to 2030.
- Additional adjustments to the RGGI cap, to account for the full bank of excess allowances at the end of 2020. The amount of this adjustment will be calculated in 2021 according to a formula to be established in the revised Model Rule, and it will be implemented over the period from 2021-2025.
- Modifications to the Cost Containment Reserve (CCR) size and trigger price. The proposed CCR size from 2021 onwards will be 10% of the regional cap. The CCR trigger price will be $13.00 in 2021, and rise at 7% per year, ensuring that the CCR will only trigger if emission reduction costs are higher than projected.
- Implementation of an Emissions Containment Reserve (ECR) in 2021, wherein states will withhold allowances from circulation to secure additional emission reductions if prices fall below established trigger prices. The states implementing the ECR will withhold up to 10% of the allowances in their base budgets per year. At this time, Maine and New Hampshire do not intend to implement an ECR. Allowances withheld in this way will not be reoffered for sale. The ECR trigger price will be $6.00 in 2021, and rise at 7% per year, so that the ECR will only trigger if emission reduction costs are lower than projected.
The RGGI states will seek stakeholder comment on the draft program elements in a public meeting to be held on September 25th in the Maryland Public Service Commission Hearing Room. Materials, including a stakeholder meeting notice and a supplementary table of year-by-year regional numbers, are posted at http://rggi.org/.
The Business Council will prepare public comments prior to the meeting reflecting our memberships input.
NYISO Issues Brattle Group Report on Pricing Carbon into the Wholesale Energy Market
The New York Independent System Operator (NYISO) issued a study on August 11th authored by the Brattle Group. The study outlines market design options that would integrate the social cost of carbon into wholesale power markets, and explores how carbon pricing can align market structures with state policies. The NYISO commissioned The Brattle Group in August 2016 to explore whether and how New York State environmental policies may be pursued within the existing wholesale market structure. The report considers the input of stakeholders but the product solely reflects the opinions of its authors. This report is intended to provide a first step in a discussion on how to harmonize state policy and wholesale markets in New York.
As the first step, the NYISO and DPS will jointly convene an one‐day conference on September 6, 2017 where all interested stakeholders will have the opportunity to hear from, and present questions to, the authors of the Brattle study and staff from DPS and the NYISO. Details about the location and agenda for this conference will be forthcoming. Stakeholders are invited to contribute to the development of the agenda by submitting questions concerning the attached report to email@example.com by September 1, 2017
The Business Council will attend the September 6th meeting. Subsequent to the meeting, the Energy Committee will conduct a web based discussion to review the report and develop a position.
CO2 Performance Standards for Major Electric Generating Facilities
The Department of Environmental Conservation (DEC) is scheduling an outreach meeting to discuss potential revisions to 6 NYCRR Part 251, CO2 Performance Standards for Major Electric Generating Facilities. The Department is considering proposing revisions to address Governor Cuomo’s call for electric generating units burning coal to repower to a cleaner fuel or close no later than 2020. The meeting is scheduled for August 28, 2017 from 10:00 a.m. - 12:00 p.m. in Public Assembly Room 129 A&B at DEC’s Central Office located at 625 Broadway, Albany, NY 12233-3255.
DOE Releases Grid Study
The Department of Energy released its assessment of the reliability and resilience of the electric grid and an overview of the evolution of electricity markets. The assessment is the result of an April memo, by Secretary Rick Perry ordering the DOE to review the impact of federal and state policies on wholesale markets, including whether wholesale energy and capacity markets adequately compensate baseload resources for providing on-site fuel supply and strengthening grid resiliency. The report concluded low natural gas prices, flat demand and a wide range of policymaking — such as federal and state environmental regulations and renewable energy incentives — have been responsible for coal plant retirements.
The report contained the following policy recommendations (abbreviated):
- Wholesale markets: FERC should expedite its efforts with states, RTO/ISOs, and other stakeholders to improve energy price formation in centrally-organized wholesale electricity markets.
- Valuation of Essential Reliability Services (ERS): Where feasible and within its statutory authority, FERC should study and make recommendations regarding efforts to require valuation of new and existing ERS by creating fuel-neutral markets and/or regulatory mechanisms that compensate grid participants for services that are necessary to support reliable grid operations.
- Bulk Power System (BPS) resilience: DOE should support utility, grid operator, and consumer efforts to enhance system resilience. Transmission planning entities should conduct periodic disaster-preparedness exercises involving electric utilities, regional offices of Federal agencies, and state agencies. NERC should consider adding resilience components to its mission statement and develop a program to work with its member utilities to broaden their use of emerging ways to better incorporate resilience. RTOs and ISOs should further define criteria for resilience, identify how to include resilience in business practices, and examine resilience-related impacts of their resource mix.
- Promote Research and Development (R&D) of next-generation/21st century grid reliability and resilience tools: DOE should focus R&D efforts to enhance utility, grid operator, and consumer efforts to enhance system reliability and resilience.
- Support Federal and regional approaches to electricity workforce development and transition assistance: In partnership with other agencies and the private sector, DOE should facilitate programs and regional approaches for electricity sector workforce development.
- Energy dominance: Executive Order 13783 (Promoting Energy Independence and Economic Growth) outlined an approach to promote the clean and safe development of energy resources while at the same time minimizing regulatory barriers to energy production, economic growth, and job creation.
- Infrastructure development: DOE and related Federal agencies should accelerate and reduce costs for the licensing, relicensing, and permitting of grid infrastructure such as nuclear, hydro, coal, advanced generation technologies, and transmission. DOE should review regulatory burdens for siting and permitting for generation and gas and electricity transmission infrastructure and should take actions to accelerate the process and reduce costs.
- Electric-gas coordination: Utilities, states, FERC, and DOE should support increased coordination between the electric and natural gas industries to address potential reliability and resilience concerns associated with organizational and infrastructure differences.