Three energy industry CEOs shared their thoughts on New England’s electric transformation last week at the Connecticut Power and Energy Society’s virtual fall conference. “The Future of Energy” featured Gordon van Welie of ISO-NE, FirstLight Power’s Alicia Barton and Curt Morgan of Vistra.

Here is some of what they discussed with moderator Janet Besser of the Smart Electric Power Alliance at the session, the first of a two-part panel on building toward a decarbonized future.

Seeking Simplicity

Asked how the COVID-19 pandemic has affected plans for decarbonization, Morgan said he has seen “an acceleration” and “leap forward,” especially from an environmental, social and governance (ESG) investment standpoint.

Van Welie said that “aspirations have accelerated” around decarbonization, although the pandemic has complicated in-person conversations.

“My concern is, can we find a way to simplify rather than making things even more complex? I say that from the perspective of the person who’s going to have to build the software to make all of this work and build the market designs.”

Carbon pricing is a simple solution, according to van Welie.

“It’ll be like pouring magic sauce all over the market in terms of making sure that it achieves both” reliability and clean energy goals, van Welie said. “What I do fear is that we’re going to turn away from that because it’s politically not feasible, and we will come up with some monstrously complex solution to a problem, which is going to take a long time to figure out [that] it’s not going to work that well.”

Barton, who joined FirstLight in August after stints at the New York State Energy Research and Development Authority and the Massachusetts Clean Energy Center, said she supports “the power of competitive markets.” But she said states have been clear that their clean-energy goals “are not being advanced by the system we have today.”

Morgan said California offered a cautionary tale. The state “got climate change ahead of reliability, and it came back to bite them.”

“I was getting calls from high-up people inside of California wanting to know [if] we could bring [online] a 70-year-old gas-and-oil plant that had been sitting dormant for 20 years,” Morgan said. “You can’t do that in summer over two weeks. You have to plan for these things.”

Morgan added that “we cannot be stuck in the middle between a competitive market and a pseudo-regulated market, where people are being subsidized for certain types of resources and those subsidies are being used to suppress price to affect capacity price payments. Then [generators will] never get that investment [back].”

Thoughts on MOPR

What is worrisome to van Welie is “it takes a while to design these markets and take them through the regulatory process before you build the software to operate them.”

“Speed is of the essence here. We can’t sit on our hands for 10 years and then wake up in 2030. So, we do need to move swiftly,” van Welie said.

Barton said, “We have to listen very carefully to what the states are saying, and they’ve expressed real concerns about some of the options.

“If we don’t take that seriously, internalize that and then — as the collective set of generators, capital providers, grid operators that are responsible for delivering the outcomes — put something forward that they can understand does achieve their long-term goals, then we’ve all failed,” Barton said.

Voters have expressed a clear desire for action on climate change, she said, and “an electricity mix that is different than the one that we have today, which is clear in the policies that you see being advanced by Democratic governors and Republican governors, like the ones in New England.”

“Unfortunately, we are short of that right now; we don’t have consensus, but that’s where we’re all going need to roll up our sleeves and keep at it,” Barton said.

Morgan, who has spent nearly 40 years in the energy industry, said he would like to see the minimum offer price rule (MOPR) go away. “We are big proponents of that happening,” Morgan said. “We’ve signed on to getting rid of the MOPR in PJM, which has been highly controversial, but you cannot do it unless you allow competitive markets to work. I’ve looked at all these different ideas, clean-energy standards and carbon pricing, and carbon pricing is the most efficient and effective way to get it done.”

The New England States Committee on Electricity (NESCOE) opposes a carbon price on top of the Regional Greenhouse Gas Initiative (RGGI). NESCOE, which has called for governance reforms at ISO-NE, said it was open to the idea of a forward clean energy market and supported the evaluation of a related proposal for an “integrated clean capacity market” in a Nov. 2 memo to ISO-NE’s Board of Directors.

“We have to respect what the states want, and I think they don’t want carbon pricing at this point beyond what they’re doing in RGGI,” van Welie said. “They also don’t want the minimum offer price rule, so if we have to find a way to remove the [MOPR], then the question that comes into focus is, what are we going to do with the missing money that then is triggered by the removal of the minimum offer price rule? That is not clear to me. There are limited options on the table for solving that, and I think we need to focus hard on that problem.”

Barton said she also has real concerns about eliminating MOPR “without something adequate to replace it.” She added that market structure should deliver outcomes that both policymakers and the people they represent “want to see” and additionally creates a stable investment environment for companies like FirstLight Power and Vistra Energy.

“It’s a real challenge. We shouldn’t sugarcoat it,” Barton said. “If we do not have sufficient signals to stimulate the investments needed to maintain reliability, as well as following through the imperative to meet the state clean energy targets, we certainly are at risk of failing on both, and that’s why we’ve got we’ve got to bridge this conversation sooner rather than later.”

The second part of the decarbonization discussion is scheduled for Dec. 15. It will feature energy and environmental policy leaders from Connecticut, Massachusetts, Rhode Island and Maine discussing their strategies for achieving state goals.