FERC on Tuesday approved Public Service Company of Colorado’s (PSCo) request to use the social cost of carbon to help dispatch its generation for the next few months (ER23-158-001, et al.).

The utility has to use the price on carbon to limit the use of its highest emitting power plants under Colorado’s clean energy law. The price on carbon has to be factored into its generation dispatch until PSCo joins an “organized energy market,” which will occur April 1 when it joins SPP’s Western Energy Imbalance Service (WEIS) market.

Once in the WEIS, a price on carbon will no longer be used because the energy market does not price that externality.

The carbon price will only be applied to plants that PSCo owns or contracts with, not spot purchases. The utility told FERC that the carbon price should make more carbon-intensive generation dispatched less often, leading to natural gas and renewables being used more than they would have otherwise.

The carbon price is expected to raise PSCo’s systemwide production costs by about $8.3 million over the first three months of this year. The wholesale customers that fall under FERC regulation will wind up paying $664,000 of that, PSCo said.

FERC found the request to be just and reasonable. Including the state-determined social cost of carbon in its generation dispatch will allow PSCo to meet Colorado’s energy policies, the commission said.

Holy Cross Electric Association asked FERC to reserve the right to reopen the case if PSCo does not join the WEIS as scheduled, but the commission said the cooperative failed to explain why continuing to use the carbon price in such a situation would be unjust and unreasonable. If it does become so, Holy Cross or any other entity would be able to file a complaint at FERC and prove that, the commission said.