When the Obama administration released the Clean Power Plan, its program to reduce carbon emissions from the power sector, it got the usual reaction from the usual suspects. Industry groups and Republican politicians protested that the plan would raise power prices, threaten the reliability of the grid, and quite possibly cause the American economy to collapse into lawless anarchy, leaving behind a blasted hellscape from a Cormac McCarthy novel. (I’m paraphrasing a bit here.)
Last week, the operators of one of America’s busiest grids weighed in. The CPP will have a modest effect on prices, they said, and none on reliability. The end is not nigh.
PJM can deal with the CPP
As you may recall, roughly half of the US electricity system has been deregulated. That half is divided into regions, each of which contains a wholesale electricity market administered by an independent system operator (ISO). (They’re sometimes called Regional Transmission Operators, or RTOs, but it amounts to the same thing.)
See the PJM Interconnection? It covers all or part of 13 northeastern states, along with DC. It is one of the more densely populated and economically vibrant regions of the country, so the performance of its electricity system matters.
How will the PJM ISO deal with the CPP? Glad you asked. As it happens, PJM just published a detailed, 117-page analysis on that very question.
It modeled a reference scenario (with no CPP) and then seven different compliance pathways, based on a variety of ways that states could meet the CPP’s requirements.
I won’t bore you with the details, but here are a few key findings:
- In every compliance pathway, resource adequacy (i.e., reliability) is maintained.
- In every compliance pathway, grid congestion decreases — an improvement over baseline.
- Depending on the compliance pathway, wholesale electricity prices rise between 1.1 and 3.3 percent. (That is tiny. Prices swing by more than that based on weather, natural gas prices, macroeconomic trends, and much more.)
There’s lots more in the study — dig in if you’re fascinated by the difference between rate-based and mass-based compliance mechanisms — but that’s all you really need to know. According to PJM, the electricity system can comply with the CPP just fine, without threatening reliability or unduly raising prices.