By Amanda Durish Cook

CARMEL, Ind. — Additional retirements of coal-fired generation could increase MISO production costs by as much as $97 billion over 20 years, according to preliminary results of the RTO’s near-term analysis of the Clean Power Plan. The results were presented to the Planning Advisory Committee on Dec. 16.

The study compared a base assumption — no additional coal retirements beyond the 12.6 GW expected under the Mercury and Air Toxics Standards (MATS) — with incremental retirements ranging from 7 GW (12.5% of MISO’s remaining nameplate capacity) to 28 GW (50% of capacity).

A loss of 7 GW would increase MISO’s production costs by a net present value of $87.3 billion over 20 years, increasing to $97.4 billion for 28 GW. MISO estimates the MATS retirements will increase production costs by $90.7 billion over 20 years.

The figures do not include costs of additional electric and natural gas infrastructure needed to support replacement generation. Those costs weren’t included in the scope of work for the near-term analysis but will be included in a long-term analysis that will run through late 2018.

The analysis found that the Clean Power Plan’s building blocks have the potential to reduce carbon emissions generated in the footprint from more than 500 million tons annually to below 350 million tons.

MISO ran 675 simulations assuming annual demand growth of 0.8% and natural gas prices ranging from $2.30 to $6.30/MMBtu. The RTO also made calculations based on renewable sources making up 14%, 20% and 30% of energy production.

Gas Price Impact

MISO said the price of natural gas could be the biggest variable in the cost of compliance. “Beyond gas prices, it’s hard to isolate the single biggest variable,” Jordan Bakke, senior policy studies engineer at MISO, told the PAC.

Bakke said MISO staff have found that the more flexible the compliance strategy — mixing generation resources and strategies such as trading programs — the lower compliance costs will be.

During the Advisory Committee’s “hot topic” discussion of the final rule Dec. 9, stakeholders were divided on how involved MISO should become in guiding compliance paths. (See Lead or Follow? MISO Stakeholders Split over RTO’s Role in CPP.)

Flora Flygt, strategic planning and policy adviser at American Transmission Co., said she appreciated MISO’s work and asked that MISO post materials as soon as they’re prepared so stakeholders can spend more time with the information ahead of meetings. PAC Chair Bob McKee said the early release of modeling information would lead to more productive meetings.

Based on a revised timeline, MISO’s near-term analysis will last until February, overlapping with the mid-term analysis slated to begin in January. Additional results from the near-term analysis will be presented at the January PAC meeting.

“It’s only an initial step into this suite of work,” Bakke summed up. “What’s on tap for the January [meeting] is looking at regional versus state compliance and rate-based versus mass-based compliance. So we have a huge trove of information coming out. The bulk of the analysis is yet to come.”