Comments
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Institute for Policy Integrity Comments to Colorado Public Utilities Commission on Electric Resource Planning
The Colorado Public Utilities Commission is revising their electricity resource planning process. Our comments to the Commission suggest legal language for incorporating externalities, like the climate effects of greenhouse gas emissions, into the state’s electricity policy. We also explain why the Social Cost of Carbon, as developed by the federal government in 2016, is the best tool for incorporating the externalities of carbon emissions into policy.
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Institute for Policy Integrity Comments to New York State on Clean Energy Standards for Existing Generators
New York State plans to provide support to some existing small hydro, wind, and biomass generation facilities at risk of closure, in order to prevent the state from backsliding on its ambitious clean energy goals. The New York Public Service Commission released a report on the Clean Energy Standard Tier 2 Maintenance program, which focuses on the criteria a generator should meet in order to receive financial support and how these payments should be determined.
Our comments on the report encourage the Commission to harmonize these payments across all proposed review processes for Tier 2 generators. We also encourage the Commission to consider how the program will interact with other energy initiatives in the state, including a potential carbon charge on wholesale electricity markets and a program that values the environmental benefits of distributed energy resources. These changes would enhance the program’s economic efficiency and help ensure that the state meets its decarbonization goals.
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Institute for Policy Integrity Comments on Carbon Pricing in Wholesale Electricity Markets to New York
Our comments to New York State Department of Public Service and New York Independent System Operator encourage the state to pursue carbon pricing, as it is the most economically efficient and technology-neutral way to internalize climate damages from greenhouse gases. We argue that the price used for carbon damages, the mechanisms to prevent emission leakage, and the allocation of revenue collected from emitting sources will all affect the level of emissions reductions the state can achieve through policy. The design of the program will determine its success in reducing emissions, and we encourage New York to consider carefully the benefits of different implementation plans.
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Institute for Policy Integrity Comments to the Public Utilities Commission of Nevada on the Social Cost of Carbon
Nevada recently passed SB 65, a bill updating the state’s electricity planning process and boosting resources that provide economic and environmental benefits to the state. The Public Utilities Commission of Nevada subsequently held a series of formal and informal workshops and calls to shape the new regulation required under SB 65. We submitted joint comments with other stakeholders that included consensus language for several sections of the regulation. We also note in these comments that while stakeholders did come to an agreement on most issues, questions remain on how to define the social cost of carbon for the implementing regulation. Accordingly, we submitted supplemental comments to the PUC, discussing how the social cost of carbon is used by several other states, including in state electricity regulations and proceedings. We note that Colorado, Illinois, Maine, Minnesota, and New York use SCC estimates from the federal Interagency Working Group, and recommend that the Nevada PUC follow a similar approach.
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Institute for Policy Integrity Comments on the Work Plan of the New York Carbon Pricing Task Force
The New York Independent Systems Operator (NYISO) and the New York Department of Public Service (DPS) recently began a joint effort to harmonize the state’s energy policies with the operation of wholesale markets, including by establishing a task force to discuss how to incorporate carbon pricing into the wholesale market. We recently submitted comments with a number of recommendations on how to ensure the task force’s work plan shapes the program in the most economically efficient and legally sound way. We suggested that price, revenue allocation, leakage, and harmonization with other state policies be included as topics in the work plan, among several others. We plan to continue to engage with this process over the next several months.
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Institute for Policy Integrity Comments on the Colorado Climate Plan update
In July, Governor Hickenlooper issued Executive Order D2017-015, Supporting Colorado’s Clean Energy Transition, which called for an update to the 2015 Colorado Climate Plan. We took this opportunity to share our recent guide, The Social Cost of Greenhouse Gases and State Policy, along with a letter encouraging Colorado state agencies to use the social cost of carbon in all major regulatory, resource management, and electricity decisions with possible climate effects.
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Institute for Policy Integrity Comments on California’s Cap-and-Trade program
This summer, California passed Assembly Bill 398, extending the state’s well-regarded cap-and-trade program until 2030. The California Air Resources Board held a public workshop on October 12, 2017, on implementing the provisions of AB 398. The Board requested feedback on a number of specific issues to aid it in finalizing the cap-and-trade regulations, including on setting a price ceiling for emissions allowances and unsold allowance allocation. In our comments to the Board, we focused on these two issues, making recommendations for developing regulations under AB 398 that help ARB fulfill its statutory mandates to take into account the externalities associated with greenhouse gas emissions and promote overall societal well-being. Specifically, we recommended that ARB should set the price ceiling for permits at least as high as the social cost of carbon (SCC) because setting a price ceiling below this threshold would fail to provide emitters with incentives that fully account for the value of avoided carbon dioxide releases. For similar reasons, we also suggested ARB preferentially allocate unsold allowances to the price containment reserve with the highest price.
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Institute for Policy Integrity Comments to Nevada’s Public Utilities Commission
Nevada’s Senate Bill 65, passed in 2017, directs the state’s Public Utilities Commission to prioritize the sources of electricity that provide the greatest economic and environmental benefits, including considering the potential costs of carbon, when reviewing utilities’ resource plans. Our joint comments with Western Resource Advocates and the Environmental Defense Fund offer guidance to the Commission on how to evaluate the potential costs of carbon. Specifically, we recommend that the Commission should require the utilities’ resource plans to use the Social Cost of Carbon as developed by the federal government in 2016 to evaluate the potential costs of carbon associated with different electricity sources. We also submitted joint comments replying to stakeholder feedback, offering specific feedback on how the Commission can modify its regulations to accomplish the intent of the bill.
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Institute for Policy Integrity Comments to Minnesota on the Social Cost of Carbon
The Minnesota Public Utility Commission (PUC) updated its social cost of carbon (SCC) values last week to a range of approximately $9 to $43, drawing from the 2015 Interagency Working Group (IWG) estimates. Minnesota’s use of the IWG SCC values recently came under scrutiny by industry groups in the state, who cited the recent energy executive order as reason to revisit the PUC externality estimates. After initial oral arguments, parties were invited to submit revised SCC values. Accordingly, we shared our recent comments to the U.S. Army Corps of Engineers, along with a cover letter explaining the importance of our analysis to the PUC.
Our comments make the case that despite Executive Order 13,783, agencies should continue to use the most-recent IWG estimates for the social costs of greenhouse gases, as this would be consistent with OMB’s Circular A-4. To the Minnesota PUC, we emphasized the following points from these comments: reliance on a global estimate of the social cost of greenhouse gases is consistent with Circular A-4; reliance on a 3% or lower discount rate for inter-generational effects—or a declining discount rate—is consistent with Circular A-4; and Circular A-4 requires agencies to coordinate and use the best available data and methodologies to estimate the social cost of greenhouse gases.
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Institute for Policy Integrity Comments to California’s Public Utilities Commission on Energy Planning
We recently submitted comments to California’s Public Utilities Commission, focused on the economic analysis used in its longer-term energy planning process across utilities. We ask the Commission to exercise caution in coordinating or consolidating this planning with other energy-related proceedings, as different proceedings have different goals and statutory requirements.
Specifically, a marginal abatement cost value may be appropriate when trying to minimize costs of achieving a set amount of greenhouse gas reductions, while maintaining a consistent treatment of different resource types and regions. However, marginal damage costs, like the social cost of carbon, should be used when comparing societal benefits and costs with the aim of finding the portfolio of projects that maximizes net welfare. Using a marginal abatement cost method across the board would not help California determine the mix and deployment of clean energy and related technologies that maximize net benefits to society.
