Houston — A Midcontinent Independent System Operator executive on Thursday expressed concern that if states choose to implement the Clean Power Plan individually, the result could end up "re-Balkanizing" the power grid.
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Describing efforts to study the CPP's effects on MISO, Clair Moeller, MISO executive vice president of transmission and technology, said: "Certain compliance approaches run the risk of re-Balkanizing the energy market."
"It does make a difference if states go down the path [toward compliance] individually," Moeller said. "It will erode the value of the market dramatically."
The US Environmental Protection Agency's Clean Power Plan sets a target of cutting carbon dioxide emissions from the existing generation fleet to 32% below 2005 levels by 2030, with interim CO2 targets to be accomplished by 2022.
How those emissions reductions are measured is a key decision, Moeller said. If states choose the "rate-based" method, they would measure the rate, in st/MWh generated, that they emit, according to an EPA fact sheet. If states convert the rate-based goal to the tonnage they would be allowed to emit over a time period, they could more easily set up a trading program.
"If only one of our states chooses rates and everyone else choose mass, they don't have anyone to trade with," Moeller said.
Whereas, by working together, MISO's diverse footprint could allow the natural-gas-heavy MISO South Region to trade with the coal-heavy North and Central regions in winter, he said. Alternatively, when the South Region has high peak demands in summer, the wind-heavy North Region might be able to reciprocate.
MISO is now defining the scope and future scenarios to be included in its analysis of the CPP, Moeller said, and hopes to issue the results in mid-2016.
The first analysis would assume that all states use the CPP's "building blocks" to meet goals using the mass-based standard, he said. The second analysis would assume they use the building blocks to meet goals using the rate-based standard.
The building blocks are: improving fossil fuel plants' efficiency, increasing the use of lower emitting sources, adding more zero- or low-emitting sources and increasing the efficiency of power use.
If the MISO grid becomes less integrated, the planning reserve margins necessary to maintain reliability would likely double, according to Moeller's presentation. Also, individual states attempting to meet their own renewable goals alone would likely require event higher reserve margins to achieve the same output.
Currently, MISO has a low regulating reserve requirement -- about 400 MW -- because generation over a large area can be controlled from a single location, Moeller said. If each state operates separately, contingency reserves would collectively require about four times as much.
Similarly, the diversity of MISO's footprint allows more economical build-out of renewable generation, which dampens the need for reserves, Moeller said. If a need to balance individual areas with higher levels of intermittent renewable resources emerges, the regulation requirement would increase.
Also Thursday, the MISO board approved amendments to the 2015 budget, largely because of changes in North American Electric Reliability Corp. critical infrastructure protection standards.
The amendment increased the 2015 operating budget by $1.8 million and the capital budget by about $3 million.