Kansas could make complying with a plan to reduce carbon dioxide emissions much easier for its neighbors, according to a regional organization that operates the grid – but it also could pay more in the process.
The Southwest Power Pool, which runs a marketplace to dispatch power throughout the region, studied two hypothetical scenarios of how the 11 member states could comply with the Environmental Protection Agency’s rule to reduce carbon dioxide emissions, which are linked to climate change. One scenario involved the states working alone, and the other had them meeting a shared goal through SPP.
The rule was released this week, and states still are sorting through its implications. Kansas Attorney General Derek Schmidt has asked the EPA to delay implementing the rule.
Lanny Nickell, vice president of engineering at SPP, said Kansas’ wind resources could contribute more than the state needs to reach its emissions goal, allowing it to offset other states’ emissions. Having more wind energy would allow states to keep more fossil fuel generation while still meeting their targets, giving the whole region more power reliability, he said.
“I think (the wind resource) put Kansas in a position to not only comply, but to help other states comply,” he said.
Wind generation can be cheaper than other sources of power in the long run, because it doesn’t require continuous purchases of coal, natural gas or uranium. It does require substantial upfront investment, however, which the ratepayers of the utility adding the generation pay for. While all electric customers in the SPP footprint would continue to receive reliable power with reduced carbon emissions, residents of some states, like Kansas, might end up paying more than states that did less to reduce their emissions.
Nickell acknowledged the SPP model doesn’t address requiring some states to make more significant investments than others.
“If two or more states decided to join together … they would have to deal with how to allocate costs,” he said.
SPP estimated the cost of building and running new generation facilities to comply with the Environmental Protection Agency’s plan to reduce carbon dioxide emissions would cost the region $3.3 billion annually if the states go it alone.
Working together through SPP would lower that cost by about $900 million, to $2.4 billion annually, according to the study – though its creators admit it only looks at two of many possible scenarios.
The calculations are based on the region needing to add 5.5 gigawatts of wind power capacity and 4 gigawatts fueled by natural gas, which produces less carbon dioxide than coal-fired plants. It isn’t clear whether those assumptions will be the reality at this point, however.
In some ways, reducing emissions together makes sense. The 11 states in the SPP already work together to make sure that every connected area has enough electricity to meet its needs, with the capacity to ramp up quick-firing generation if strains start to emerge in the grid. SPP also tries to dispatch the lowest-cost power first, with the goal of lowering electric costs for everyone.
Nickell said one state’s decisions could force others to make decisions against their interests – likening it to Whack-a-Mole, but with carbon dioxide instead of a rodent. For example, if a state got rid of a substantial amount of coal-fired generation, but didn’t replace it, that could force other states to produce more energy and possibly miss their emissions targets, he said.
“That’s going to force us to look for generation, maybe in another state,” he said.
Regulating emissions as a group has possible drawbacks, however, including the loss of flexibility and the possibility some states will pay more than their share to reach compliance.
The Kansas Corporation Commission, which regulates electric utilities and is working with the Kansas Department of Health and Environment to come up with a compliance plan, reserved judgment on whether regional compliance would make sense. It did, however, say that compliance likely will be costly under any scenario.
“The Kansas Corporation Commission is tasked with ensuring that Kansas ratepayers have reliable electric service at the lowest cost option,” KCC staff said in a statement. “Based upon the proposed EPA’s Clean Power Plan rule, the KCC estimates that Kansans will be asked to pay for between $5 billion and $15 billion in additional infrastructure that will require as much as a 30 percent increase in rates over the next 13 years.”
To view the SPP study, visit www.spp.org/publications/Clean_Power_Plan_State_Compliance_Study.pdf.
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