Carbon Pricing Comment Summary from FERC Technical Conference

Legal Considerations for State-Adopted Carbon Pricing and RTO/ISO Markets

Ari Peskoe, Director | Harvard Electricity Law Initiative
“No serious conversation about the future direction of the power industry ignores carbon emissions.”

Matthew E. Price, Partner | Jenner & Block LLP
 “A carbon price addresses…inefficiency by forcing the producer to internalize the full marginal cost of its use of a polluting resource. Accordingly, purely from the standpoint of economic efficiency, it is reasonable for an RTO to incorporate a carbon price in its market design.”

Prof. Jim Rossi, Judge D.L. Lansden Chair in Law |  Vanderbilt University School of Law
“…at its most basic level, a carbon price associated with electric power production is no different from any other input cost, which can be reflected in FERC authorized rates.”

Carbon Pricing Mechanisms and Interactions with RTO/ISO Markets

Dr. Joseph Bowring, Independent Market Monitor | PJM, Monitoring Analytics
“Implementation of a carbon price is a market approach which would let market participants respond in efficient and innovative ways to the price signal rather than relying on planners to identify specific technologies or resources to be subsidized.”

Devin Hartman, Director of Energy and Environmental Policy | R Street Institute
“The most compatible state climate policy for wholesale electricity markets is explicit carbon pricing, …. the market design executes in a manner that satiates reliability parameters, unlike policies that circumvent market design irrespective of reliability conditions.”

Arne Olson, Senior Partner, Energy and Environmental Economics | E3
“Carbon pricing provides incentives to reduce generation from high emitting resources, and to invest in low emitting ones. It treats all abatement strategies equally, regardless of technology type or geographic location. …A stable, long-term carbon pricing system is truly the holy grail for climate policy.”

Gordon van Welie, President and CEO | ISO New England
“ISO New England has long advocated for carbon pricing as a solution that allows markets to efficiently price emissions without harming price formation.”

Prof. Frank A. Wolak, Professor of Economics | Stanford University
“…carbon pricing is the ‘least cost’ way to reduce the carbon content of an electricity sector, and of a national or global economy.”

Considerations for Market Design

Dr. Anthony Giacomoni, Senior Market Strategist, Advanced Analytics | PJM Interconnection
“I would like to reiterate that market-based programs are the most efficient and cost effective means to achieve emissions reductions. Markets can internalize policies and produce the most efficient and cost-effective combination of resources to implement them.”

Prof. William Hogan, Raymond Plank Professor of Global Energy Policy | John F. Kennedy School of Government, Harvard University
“Paying for carbon emissions at the common carbon price would become part of the variable costs of generation that are part of the generation offers, are included in the dispatch optimization, and determine the locational power prices."

“This is already done under the cap-and-trade program of the Regional Greenhouse Gas Initiative (RGGI). The market works and the system operator takes on no responsibilities for managing carbon pricing or revenues.”

“The fundamentals of efficient real-time electricity markets are fully compatible with efficient carbon pricing.”

Dr. Matthew White, Chief Economist | ISO New England
“The recent experience in California has highlighted the importance of ensuring that a regional transition to a lower-carbon power system preserves its reliability.”

“…to decarbonize the power sector, pricing carbon emissions would be a trifecta: simple, cost-effective, and transparent. Equally importantly, it would work harmoniously with wholesale electricity markets.”

Clare Breidenich | Western Power Trading Forum
“For the electric sector, carbon pricing aligns well with the operation of competitive electricity markets, because it enables the cost of carbon to be factored into generator dispatch.”

 J. Arnold Quinn | Vistra Corp.
“Carbon pricing can reduce the tension between state and federal authority and allow ISOs, stakeholders, and the Commission to focus on the reforms needed to facilitate the transition to lower carbon emitting resources while maintaining reliability.”

Harry Singh | J. Aaron & Company
“Carbon pricing can be a positive development from the perspective of investment in new low emissions and renewable resources. It would also be a preferable alternative to out of market mechanisms to support the continued operation on nuclear units...”

Joseph Wadsworth| The Energy Trading Institute
“Incorporating a carbon price in the energy market to meet policy goals largely shields consumers from bearing cost risk associated with subsidies and outside-the-market contracts. Rather, market participants will bear the resource performance and transaction risk and will be subject to competitive pressure, as it should be.”

Closing Roundtable Discussion

Laura Bean | ENGIE North America on behalf of ENGIE & AWEA
“The use of a carbon pricing mechanism at the wholesale level will unleash competitive market forces to provide affordable and reliable supply – in furtherance of the wholesale markets’ mission – while also efficiently meeting state decarbonization goals.”

Christopher Crane | Exelon
“The most direct way to utilize wholesale markets to achieve state goals would be for an entire region to implement a carbon price as part of the energy market dispatch algorithm. This is the approach proposed by the New York ISO.”

Paul Segal, CEO | LS Power
“Price and competition will drive innovation as firms like ours search for the least expensive ways to provide carbon reduction. A durable mechanism for pricing carbon will reduce investment risk and drive down the cost of capital.”

Dr. Susan Tierney, Senior Advisor | Analysis Group
“NYISO’s proposal … could support efficient dispatch and reliable operations, including by sending investment signals to site new resources in areas where they provide value to the grid as well as zero-carbon electricity supply to consumers.”

A complete list of opening remarks and comments by conference participants can be viewed on the FERC website.

Learn more about our carbon pricing plan at www.nyiso.com/carbonpricing.