Halftime Report from the FERC Carbon Pricing Conference

I just finished wathcing the first two panel discussions and here are my takeways, so far.

Commissioners requested panelist opinions on the Commissions authority with regard to unilateraly implementing carbon pricing in whole electricity markets and preemptive approaches to address environmental impacts of CO2:

• Majority seem to believe that FERC does not have "litigatable" authority to approve a carbon pricing policy for wholesale electricity markets
• Some people beleive that a "broad interpretation" of FPA 202 and 205 "may" provide FERC authority to approve a carbon pricing policy, but there's a question if it could hold up in litigation
• States defintely have authority to implement carbon pricing in retail electricity via existing programs, i.e. RPS and RGGI
• FERC could have authority to approve carbon pricing policies IF congress were to provide cover through legislation that applies across all uses of fossil fuels, nationwide
• Leakage across State's which have no carbon tax "adder" can impact the effects of carbon generation and electricity costs in those States that tax carbon
• It appears that States would have to forego their existing carbon programs (i.e RGGI, RPS) in order to "open the door" for a carbon tax on wholesale electricity. It appears doubtful that States would agree to this "deal".
• Renewable generation is growing across the country, but not fast enough to meet State energy targets
• We must manage a clean energy transition and ensure resource adequacy (summarizing GVW's comments)
• Green buyers such as Google and Facebook are having a profound influence on the growth of renewables
• We're going to need more flexible balancing resources as the penetration of renewables increase it's presence/influence on supply
• PJM, NYISO and ISO-NE were well represented; no participation was observed from MISO, SPP or ERCOT, some people seem to have association with CAISO, but not being from CAISO
• Resource adeqaucy for reliability and a clean energy transition are far too important to ignore - something must be done to address both
• The focus is largely about discussing economic options to address carbon emissions
• There was no serious discussion as to direct investment in clean generation to meet State Energy Goals as a means to reduce carbon, via Wholesale markets (which is the approach proposed in AOCE)
• Absent from these discussions is any sense of urgency to rapdily and effectively address the effect of climate change on the planet, e.g. fires in CA, droughts in New England, fierce weather systems impacting a large number of people - derecho?)
• I know it is outside of FERC's jurisdiction to address climate change so the States have been taking up this challenge; we really need a symbiotic solution in order to ensure a reliable electric system (adequate flexible resources) and reduction of carbon emissions across all sectors of the economy to have any hope of addressing climate change.
• The solution will require a bigger hammer than FERC is able to swing.

It's time for me to end my report and go back for the second half of what is shaping up to be a very interesting discussion.