EPA GHG REGS: We Read the Comments, So You Don't Have To, Part 3: ISOs and RTOs

Posted by Frank Swigonski and Caitlin Marquis on Jan 12, 2015 3:28:00 PM

After the comment period closed on December 1, the stats were in: EPA received more than 4 million comments on the Clean Power Plan from individuals, organizations, and state regulatory bodies. By one estimate, it would take 71 people working eight hours a day from now until June to read them all. But don't worry—our Carbon Policy Analysts identified the top comments and plowed through them. This is the third of five blog posts presenting AEE’s summary of and take on comments from a few key stakeholders: federal and state regulatory organizations, states, ISO/RTOs, utilities, and industry and environmental groups. Here, we cover the reactions of ISOs and RTOs.

The chief concern of the Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs) is how the Proposed Rule will affect reliability of the grid. These concerns were summarized in comments filed by the ISO/RTO Council (IRC) and signed by all nine ISOs and RTOs in the U.S. IRC proposed that the Final Rule require reliability assessments during the planning and implementation of state plans (SIPs), and that EPA should establish criteria for evaluating how SIPs will impact reliability. IRC also proposed that the Final Rule give more time to build new transmission infrastructure, not only for natural gas as proposed in the NODA, but also for electricity. Most importantly, IRC outlined a detailed proposal for an RSV, which would allow states to exceed their emission targets if reliability were threatened by an unforeseen event such as extreme weather or energy shortage.  IRC envisioned a well-defined process through which an ISO, RTO, or entity responsible for reliability would administer an RSV. The RSV process would be overseen by NERC.

Some variant of an RSV was proposed by nearly all of the ISOs/RTOs in their individual comments to EPA. In addition to an RSV, ISOs/RTOs also commented that the interim targets should be eliminated or altered in some way in order to maintain reliability. While all these comments featured reliability as the chief concern, each ISO/RTO also highlighted issues specific to its service territory.

New York ISO (NYISO) pointed out that, while it supported reducing carbon emissions, the Building Block approach was based on flawed assumptions about how NYISO’s electricity market operates; in particular, the majority of capacity in New York City is dual-fueled oil and gas generation which cannot be redispatched. Having this capacity, according to NYISO, is essential for ensuring reliability during natural gas shortages. NYISO proposed specific adjustments to all four Building Blocks, as they are applied to New York, and requested a comprehensive review of the Clean Power Plan by NERC.

Other ISOs cited specific reliability constraints in addition to the general ones outlined by IRC’s comments. Midcontinent Independent System Operator (MISO), which was the least critical of the Proposed Rule, said that the emission reduction targets are workable. However, it pointed out that MISO’s service territory is already facing diminished reserve margins over the next few years because of coal plant closures resulting from EPA’s Mercury and Air Toxics Standards (MATS) rule. MISO proposed to allow states to set their own interim targets in order to solve the reliability issues associated with coal-plant closures. MISO has also reiterated that it is supportive of a regional approach to compliance. In an assessment released prior to its comments, MISO found that a regional compliance plan would reduce costs by $3 billion.

PJM Interconnection (PJM) also found that a regional approach would be more cost-effective in its service territory. In an analysis of the Clean Power Plan released prior to its comments, PJM found that a regional approach to compliance would be 30 percent cheaper than a state-by-state approach. However, its comments addressed certain aspects of the Proposed Rule which PJM believes inadvertently create disincentives to regional coordination. It proposed, for example, that the final rule create incentives for states to coordinate regional EM&V practices. PJM also endorsed the concept of an RSV.

Comments from the Electric Reliability Council of Texas (ERCOT) have not been posted on the federal register as of January 9. However, ERCOT’s November 17 analysis of the reliability impacts of the Clean Power Plan has been cited in comments by several utilities and regulators from Texas and other states.  ERCOT’s primary concern is that the timing and scale of the Proposed Rule would negatively impact reliability given ERCOT’s existing transmission infrastructure. According to ERCOT’s assessment, the Proposed Rule would result in retirement of half of ERCOT’s coal fleet and raise electricity prices for Texas consumers by 20 percent, while also requiring costly regulating services and transmission upgrades that it says are not included in EPA’s Regulatory Impact Analysis.

However, a more recent assessment by ERCOT, conducted at the request of the Texas Public Utilities Commission, drew a different conclusion. The December 16 assessment, titled “Impacts of Environmental Regulations in the ERCOT Region,” took a wider scope, examining the effects of the Clean Power Plan in conjunction with other new air regulations such as the Cross-state Air Pollution Rule (CSAPR) and the Mercury Air Toxics Standard (MATS). In this assessment, ERCOT concluded that after these rules take effect the incremental impact on reliability from the Clean Power Plan will be negligible. The report found that Texas would only have to cut an additional 200 MW of coal-fired generation—less than one power plant.

In October, Southwest Power Pool (SPP) filed initial comments highlighting a concern that the timeline of the Proposed Rule would negatively impact reliability. SPP proposed moving the interim target start date from 2020 to “at least 2025.”  It also proposed a series of technical conferences with FERC and EPA to discuss how Clean Power Plan implementation would affect reliability. In response to the NODA, SPP filed supplemental comments on December 1 claiming that the proposed “glide path” would not solve the reliability issues it outlined in its initial comments and reiterating the need for both an RSV and a delay in the interim goals to 2025.

Download AEE's Comments

Correction: A prior version of this article mistakenly asserted that MISO found that a regional compliance plan would reduce costs by $3 million. Per a comment from Andy Schonert of MISO, that number is actually $3 billion.

Topics: EPA GHG Regs



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