What does the Clean Power Plan mean for transmission?
Generation isn’t the only sector of the industry that’s been impacted by the Clean Power Plan. It also affects transmission owners and operators
It’s been more than 10 months since the Environmental Protection Agency (EPA) proposed the Clean Power Plan, also known as Section 111d of the clean air act. The plan is designed to cut greenhouse gas emissions from fossil-fired power plants.
When I googled the plan, if I hadn’t known better, I would have thought the proposed plan was released last week. A new news story about the plan is released almost daily. Back and forth opinions and legal battles related to the proposed plan will be around for months (or years) to come. In the meantime, power generators must consider the proposal as they plan for future capacity needs.
Generation isn’t the only sector of the industry that’s been impacted by the Clean Power Plan, however. It also affects transmission owners and operators. I interviewed Nina Plaushin of ITC Holdings Corp. to learn specifically how EPA emissions regulations impact ITC and other transmission system owners and operators.
Plaushin is vice president of regulatory and federal affairs at ITC Holdings, the largest independent electricity transmission company in the country, operating high-voltage transmission systems in Michigan’s Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma.
Plaushin explained that when the Clean Power Plan was first released, most people focused on fuel switching and power plant retirements. Transmission, however, is the other side of the coin, she said.
“The clean power plan cannot be implemented without transmission. Section 111d did not consider transmission as much as we would have liked or as much as is needed. It didn’t fully consider transmission constraints and maintaining transmission reliability,” Plaushin said. “We at ITC, as well as others in the transmission business, do not feel that the proposed timeline is adequate for transmission planning and build out that is needed to maintain system reliability.”
In the regulatory environment, and much of the industry as a whole, there is a disconnect between what must be done to keep the system reliable vs. what must be implemented to meet the clean power plan goals.
ITC is trying to educate generators to ensure they understand it’s important to consider transmission requirements and needs much earlier in the planning process. The current process is to build transmission on a just-in-time basis.
This has worked up until now because large numbers of new plants were not being built and brought online in one area at one time. The clean power plan, however, means that fuel switching and new plant build out will occur much quicker and in some areas, especially the Midwest, in more concentrated fashion, Plaushin said.
“Never before have we seen so much fuel switching in one area. It’s important for EPA, generators and others to understand that from a system reliability standpoint, fuel switching in the same location can still have a big impact of transmission owners/operators,” she said. “The plants where fuel switching will occur could be offline for a long time to make the transition. This certainly affects transmission capacity, reliability and operation.”
In addition, some of these plants might require additional transmission capacity. The magnitude of the capacity/generation switching in the Midwest is especially big, Plaushin said. Impacts from past clean air regulations were not as large because the regulations included initiatives and incentive programs, like NOX and SO2 trading credits, that incentivized generators to install scrubbers and other pollution control equipment early so they could start receiving credits and making money.
“The EPA’s clean power plan doesn’t have these types of incentives,” Plaushin said. “Most states don’t have a carbon trading system in place, so there is no incentive for generators to act quickly. In fact, it could be better for them to wait longer to see what happens with the plan. This makes it hard for transmission companies because they get very little preplanning time and are not a big consideration in the generator’s planning process.”
In addition, Plaushin said the Clean Power Plant will impact some areas of the country more than others.
“All states aren’t equally situated,” Plaushin said. “This is especially true in MISO (Midcontinent Independent System Operator). Minnesota has already done a lot to curb its carbon emissions, but other states in MISO have done little or nothing.”
Cost allocation for transmission projects also must be addressed. Traditionally, regional transmission project costs are shared by the entities in the region that will benefit from the project. The Clean Power Plan, however, could make it necessary for projects to be built in regions that will see no benefits from the project.
“For example, a state might need to bring renewables into its region in order to meet federal environmental regulations or renewable portfolio standards. New transmission might need to be built across a region in which no one in that region will receive benefits from the project. This type of scenario creates a question of who will pay for the project,” Plaushin said.
If environmental regulations drive generation changes, then the rates might need to be adjusted to also include the cost of transmission projects.
The current shift in generation provides a unique opportunity for regions and federal regulators to look at the benefits of transmission infrastructure, Plaushin said. Currently, the focus is very narrow. Most look just at the financial benefits of getting electricity to its desired locations. They should look at the ultimate benefits to system reliability, as well as the benefits gained from building for extra capacity instead of operating only on the margin.
“Transmission is integral to the success of the clean power plan, but it really isn’t being addressed yet,” she said. “The industry needs to look at transmission long-term, not just view it on what’s needed now, but instead on what will be needed in the future to keep the system balanced and reliable.”
Author: Teresa Hansen is editor in chief of POWERGRID International, Electric Light & Power and Utility Products magazines, as well as advisory committee chairwoman for DistribuTECH and Electric Light & Power Executive Conference.