SPP: State-by-State Approach to Cutting Emissions Costly


SPP: State-by-State Approach to Cutting Emissions Costly
(SPP)

Southwest Power Pool said Monday that the proposed federal Clean Power Plan will result in higher energy costs if instituted on a state-by-state basis.

SPP, the regional power grid operator based in Little Rock, released its analysis of the potential impact of the Environmental Protection Agency's Clean Power Plan draft.

More: Read SPP's full analysis (PDF).

It says a state-by-state compliance approach could result in nearly 40 percent higher costs than a regional approach. The Clean Power Plan is a proposed rule to cut carbon pollution from power plants. It proposes to reduce U.S. carbon-dioxide emissions 30 percent from 2005 levels by 2030.

SPP said the state-by-state approach would cost an estimated $3.3 billion annually in new generation capital investment and energy production costs to comply with the proposed plan.

The assessment doesn't include the cost of new transmission needed to maintain reliability, gas infrastructure expansion, market enhancements or the transmission congestion and losses that could result from compliance, SPP said.

"Our analysis affirmed that a state-by-state compliance approach would be more expensive to administer than a regional approach," said Lanny Nickell, vice president of engineering for SPP, in a news release. "A state-by-state solution also would be more disruptive than a regional approach to the significant reliability and economic value that SPP provides to its members as a regional transmission organization."

Arkansas Attorney General Leslie Rutledge has vowed to fight the plan and even joined a group of state attorneys general in challenging the draft of the plan. That challenge was thrown out in June by the U.S. Court of Appeals for the District of Columbia.

SPP's analysis was based on the EPA's proposed state carbon-emission reduction goals and does not take a position on the appropriateness of those goals or the EPA’s supporting assumptions, according to the release.

The EPA is targeting older, coal-fired power plants that it says are the largest source of carbon dioxide emissions in the U.S.

The study concluded that "coordinating individual state plans in a regional market where energy flows without respect to state boundaries and benefits are shared regionally will be extremely challenging and risky for states."

A reliability assessment of the federal plan conducted last fall by SPP found that it didn't "allow enough time to build the generation and transmission infrastructure needed to maintain system reliability and avoid severe system overloads that could lead to cascading outages."