The 20-year cost of the Midcontinent Independent System Operator's compliance with the US Clean Power Plan could be as little as $5.8 billion to as much as $104 billion in today's dollars, depending on which strategies are pursued, stakeholders learned Wednesday.
During Wednesday's MISO Planning Advisory Committee, Jordan Bakke, MISO senior policy studies engineer, presented an interactive spreadsheet that showed the effect on compliance and costs of different values of five types of variables: coal plant retirements, natural gas prices, carbon dioxide prices, renewable portfolio standards and energy efficiency levels.
MISO modeled retirement levels at 7GW, 14 GW, 21 GW and 28 GW. These retirement levels are in addition to 12.6 GW assumed to retire because of the Mercury Air Toxics Standards rule.
The natural gas prices modeled were $2.30/MMBtu, $4.30/MMBtu and $6.30/MMBtu. The CO2 costs modeled were zero, $10/short ton, $25/st, $50/st and $100/st. The RPS modeled were the existing level, which is about 14%, plus levels at 20% and 30%. The energy efficiency levels were the current mandates, a higher level described as economically viable and developed by MISO, and an even higher potential energy efficiency level described in the CPP.
The least expensive option that at least complied with the CPP CO2 emissions reduction target for MISO was an option with no additional coal retirements, the low natural gas price, CO2 costs at $25/st, and the existing RPS and energy efficiency levels. This level actually results in overcomplying with the CPP target by 4%.
The most expensive option that barely met the compliance target also had no additional coal retirements, the high natural gas price, CO2 costs at $50/st, a 30% RPS and the potential energy efficiency level described in the CPP.
Natural gas prices have "by far" the biggest effect on compliance costs, Bakke said, "but it's also the one that is not under anyone's control."
The compliance costs were calculated as the net present value of 20 years of compliance spending, Bakke said. The models included fuel, operations and maintenance and generation capital costs, but not transmission costs, he said. It assumed load would grow at 0.8% annually.
This spreadsheet was part of Bakke's presentation on the initial results of MISO's near-term analysis of the Environmental Protection Agency's final Clean Power Plan, which calls for cutting emissions from the existing generation fleet to 32% below 2005 levels by 2030. The final rule also set interim CO2 reductions to be accomplished by 2022.
MISO intends to continue analyzing the compliance pathways with a final presentation in February, Bakke said. MISO plans to prepare for how the transmission effects of compliance strategies between January and June, known as the "mid-term modeling" process.
Between July 2016 and November 2018, MISO plans to conduct a long-term analysis, which incorporates states' initial proposed state plans. States must present their plans or request an extension by September 2016, Bakke said. The deadline for the EPA to issue federal implementation plans for states that do not submit approvable plans is November 2017, and all final state plans are due by September 2018.
