By Amanda Durish Cook

CARMEL, Ind. — Only a heavy, region-wide build-out of solar, wind and energy efficiency could make rate-based compliance less expensive than the mass-based path — and only if all states go along — according to MISO’s near-term analysis of the Clean Power Plan.

Jordan Bakke, senior policy studies engineer at MISO, told the Planning Advisory Committee Wednesday that it would take a major change in the region’s resource mix to make the rate-based option attractive. Even varying natural gas prices don’t change the bottom line.

When looking at the states individually, MISO found that only Michigan and Louisiana realized economic advantages using rate-based compliance. But that benefit was lost when groups of other states choose mass compliance, the models indicate.

MISO used Arkansas’ coal-heavy generation fleet to study capacity scenarios and found the state would need to buy emission rate credits or allowances to achieve compliance unless “a balance of coal retirements and renewables penetration positions it as a seller.” Eddy Moore of the Arkansas Public Service Commission said he was impressed with MISO’s level of modeling, which he hadn’t seen from other RTOs.

The new state-specific results bolster MISO’s earlier conclusion that mass-based compliance would be far cheaper than rate-based compliance. (See MISO: Mass-Based CPP Plan 1/3 Cost of Rate-Based).

MISO said its analysis indicates similar amounts of additional generation and transmission would be needed under both rate-based and mass-based compliance. Although states have a lot of latitude in what generation they choose to expand with, MISO’s near-term modeling is not identifying an optimal resource mix or looking at which pipelines or transmission projects need to be built.

The RTO said mass-based compliance would foster interstate trade in emission rate credits and “produces a more balanced mix of buyers and sellers within MISO.”

MISO said it will present additional near-term results at the March Planning Advisory Committee.

Analysis Continues Despite Stay

Bakke said MISO was continuing its analyses despite the Supreme Court’s Feb. 9 order preventing EPA from enforcing the CPP pending an appellate court challenge. The uncertainty over the impact of the stay only increased with the death, four days later, of Justice Antonin Scalia. (See Scalia Death Scrambles Clean Power Plan Odds.)

The stay “means it’s still in effect but on hold. It’s not overturned. Because it’s only a hold, MISO feels it’s important to continue studying the impacts of the Clean Power Plan,” Bakke said.

Anthony Artman of Ameren asked how long-term study efforts will be affected if states in the footprint decide to delay CPP plan development.

Bakke said the near- and mid-term analyses will be largely unaffected by any delays in compliance resulting from the stay. “The big change will be how the stay impacts the long-term analysis,” he said.

MISO said it intends to use state plans as they become available for modeling.

To date, most states in the footprint are either still reviewing the stay or haven’t announced plans. Kentucky, North Dakota, South Dakota and Montana have suspended planning, while Minnesota said it will continue. Bakke said MISO would continue to be in touch with stakeholders and state officials. He also said questions about how the stay will affect long-term modeling would be best answered in upcoming stakeholder CPP workshops.

“We have a bit of a chicken-and-egg problem here when we don’t know how states plan to comply,” Bakke said. He said the RTO will refine the modeling as it receives more information from states over the next three years. “There’s definitely going to be a lot of uncertainty and a lot of iteration until then,” Bakke said.

Impact on MTEP

Bakke said MISO’s mid-term analysis will still be used to influence its Transmission Expansion Plan 2017 futures and its siting process review. “After the study is complete, we’re feeding this information into our processes, so it won’t be lost,” he said.

Planning will kick off at the Feb. 23 MTEP Futures Development Workshop, according to Senior Transmission Planning Engineer Matt Ellis.

Ellis said the futures need “bookends” to determine how anticipated coal retirements, natural gas prices and the economic viability of renewables affect the fleet. He said although MISO would use a presentation with examples to start discussion on the futures’ parameters, the numbers would not be final.

“Anytime we bring numbers to stakeholders, we run the risk of ‘Oh MISO, you’ve already got this figured out,’” Ellis said. “And that’s definitely not the case. These are just to start the conversation. … Future definitions are still to be determined.”

Cross State Rule

In tandem with long-term CPP modeling, MISO will conduct a study to evaluate the impact of the proposed Cross State Air Pollution Standard (CSAPR) on its system. The standard, which could be implemented in 23 states by May, would mandate that states install modern combustion controls such as low NOx burners, operate existing control technologies, shift generation to lower NOx-emitting units and increase dispatch of natural gas combined cycle plants while reducing coal-fired generation.

“All-pollutant modeling is something we do, and we have studied cross-state air pollution in the past,” said J.T. Smith, MISO’s director of policy studies.

“Like with the Clean Power Plan, we need to have discussions with stakeholders … on the nuances of the [state emission limits],” Smith said, noting that CSAPR might be subject to additional court challenges.

He said MISO would examine the standard’s impact on reliability as well as costs, drawing on a business-as-usual model from the 2015 Transmission Expansion Plan for the study. Based on the findings, the standard could be incorporated into MTEP17.

While Smith said MISO would move “as quickly as possible to get this off our plate,” he didn’t place any deadlines on the study.