By Tom Kleckner

LITTLE ROCK, Ark. — SPP and its stakeholders began trying to put their arms around the massive task of Clean Power Plan compliance last week, debating the pros and cons of mass-based versus rate-based compliance, a reliability safety valve and how best to involve themselves in the compliance process.

The goals of SPP’s Clean Power Plan Review Task Force — a name so unwieldy its chairman repeated it slowly to avoid stumbling over the words — are to develop policies and recommendations to SPP’s Strategic Planning Committee, including the development of educational materials for environmental agencies and SPP’s members and Regional State Committee. The task force will also provide comments to the Environmental Protection Agency on its Federal Implementation Plan, which the agency would apply to the states that fail to file their own plans by the 2018 deadline.

Rate vs. Mass

The task force delved into a recent staff survey of members that asked whether they preferred a rate-based or mass-based compliance approach, along with the pros and cons of each. Twelve of the 20 respondents said they preferred a mass-based approach or identified its advantages, with only one preferring a rate-based approach.

SPP Vice President of Engineering Lanny Nickell said the survey identified two ideas that have a broad consensus: 1) a robust emission-trading program is “paramount” no matter which compliance approach a state chooses; and 2) states should develop their own implementation plans, rather than be subject to the FIP, which will have less flexibility.

Those who indicated they favored the mass-based approach said it was due to its flexibility in accommodating various generation technologies, its ease of monitoring and its consistency with other current emission-compliance approaches and mechanisms.

Other comments in favor of a mass-based approach said it would likely lead to a more robust allowance trading program, and that trading between mass-based states could be accomplished using established criteria from similar programs. Emission-allowance prices would be more easily reflected in wholesale energy prices than emission rate credits, they said.

“The survey was good,” Nickell said. It “at least gave us a preliminary feel.”

Nickell, who is leading the RTO’s CPP compliance efforts, said a trading-ready approach is gaining favor as a way to reach compliance.

“But if a few states go one way and the rest go the other way, those few states may have trouble trading,” he said. “It’s my understanding they’re not compatible. If you have a rate-based state, you can’t trade with a mass-based state.”

Reliability Still a Concern

SPP staff also shared a qualitative assessment of the proposed FIP, with Director of System Operations Sam Ellis pointing out that EPA will consider comments about providing for a reliability safety valve for mass-based plans. For example, he said the proposed FIP does not factor generating units’ need to run for reliability reasons when allocating allowances.

Ellis said EPA believes the need for the safety valve is “highly unlikely” but possible for states with “inflexible requirements on specific” generators.

“The EPA believes most events would be short duration and that emissions standards will not require adjustment,” Ellis said.

Xcel Energy’s Lauren Quillian questioned that assumption. “The EPA is essentially making the argument that trading will solve everything,” she said. “But why not have a reliability safety valve?”

Ellis said staff believes that while some form of a reliability backstop would be beneficial, the roles of FERC, EPA and the Energy Department should be clarified in the event of unforeseen disasters.

Regional Compliance

The qualitative assessment not only reiterated that a mass-based approach has more advantages than a rate-based approach (more liquid trading markets, better planning assumptions, easier measurements and verification, etc.). It also indicated consistent plans among SPP’s states would benefit reliability, particularly those that allowed interstate trading of allowances or credits.

Nickell said SPP continues to involve itself as the states in its footprint begin to discuss their approach to CPP compliance. The RTO introduced itself to air regulators last month with a webinar on the plan and its reliability implications, and it has participated in meetings with Missouri, Kansas and Minnesota regulators and legislators. (See SPP to Push Regional Approach in First CPP Webinar.)

“They’re really appreciating the individual nature of how we can help them,” Nickell said. “We want to ensure what the states do doesn’t disrupt the regional energy market.”

There was some disagreement, however, about whether to involve states outside of SPP’s footprint in the compliance process.

“Are there any benefits to working with regions next to ours?” Golden Spread Electric Cooperative’s Mike Wise, the task force chair, asked the group.

“We have a big enough problem already, so no, not at this time,” Richard Ross of American Electric Power replied.

“I think it’s really important to get together with MISO,” said Steve Gaw, SPP policy director for The Wind Coalition. “The states are going to do what’s best for the state. They don’t care whether [the RTOs] are part of one state or the other.”

The task force met after the SPC unanimously approved modifications to the group’s scope, expanding the group’s size from five members to seven (though open participation is welcomed).

The task force is composed of Wise, Burton Crawford (KCP&L Greater Missouri Operations), Dennis Florom (Lincoln Electric), Dale Niezwaag (Basin Electric Cooperative), Wayne Penrod (Sunflower Electric Cooperative), Quillian and Ross. Each of SPP’s 14 states is represented by a member.