Opinion

New Challenges, New Tools to Address the Clean Power Plan

It is clear to anyone with even a passing interest in the energy industry that the boom in natural gas production has fundamentally transformed the American energy landscape. The unlocking of shale gas reserves has played a major role in changing the conversation about what our energy future looks like.

This has especially been the case in the 15-state region served by MISO. Traditionally, coal-fired power plants provided the vast majority of the energy across MISO’s north and central regions. However a range of factors such as environmental regulations, the price of natural gas and new technology, are driving older, less efficient coal plants offline.

As the MISO region transitions to a more diverse fuel mix, natural gas will play a bigger role in generating electricity. MISO’s generation interconnection queue process, which ensures the reliable interconnection of proposed power plants, has seen a 200 percent increase in natural gas projects over the past two years, with 20,000 megawatts of active natural gas projects in the queue.

With natural gas generation playing a bigger role in MISO, we are increasing our coordination with the gas industry to ensure that plants have the fuel they need. Since 2002 MISO has been actively engaged with our gas pipelines and created the Electric & Natural Gas Coordination Task Force in October 2012. Following the winter of 2014, MISO took steps to gain better visibility into the gas pipeline system to help our operators in the control room know which gas units would be available to meet demand. Most recently, we worked with stakeholders to better align our energy market schedules with the gas industry’s market schedules.

But our efforts aren’t solely focused on the challenges of today. Part of MISO’s role is to provide our members with insights into future power system operation as they make business decisions for tomorrow. When we first looked at the impact of the Clean Power Plan, the consensus from our stakeholders – including member companies and state utility regulators – was to perform a study of the total impact of the rule, including new infrastructure needed to comply in a way that is both cost-effective and reliable.

Given the complexity of the rule and the growing interdependence of the electric and gas industries, there was no quick way to do this. In preparation for the assessment of the final Clean Power Plan, MISO is developing an analytical framework to provide a better view of how the proposed regulations will impact reliability and economics of our region.

Using this framework, we’re able to provide a sophisticated analysis of both a regional and state-by-state view of the total impact of the rule – what plants are at risk of retiring, what generation could replace them, what kind of electric and gas infrastructure expansion is needed to serve those new plants and what are the indicative costs and schedule to achieve that expansion. It’s a comprehensive look, designed to help states and generators begin to formulate their plans for compliance with the Clean Power Plan.

Our ongoing assessment of the draft rule is expected to be completed by August. Once the final version of the Clean Power Plan is released, we will review the rule with stakeholders and begin the work to fully assess its impacts.

MISO’s role is to make the electric system as efficient as possible. By doing this we ensure a reliable grid and least cost power for customers in our region. As the generation mix evolves, the methodology we’ve developed to evaluate the Clean Power Plan will allow us to continue to focus on how we optimize the electric grid while evaluating both electric and gas infrastructure requirements for our members to make smart decisions for their customers.

It is clear that the energy landscape will continue to evolve as MISO and stakeholders plan for the future. Through careful work with utilities, regulators and other stakeholders, MISO is well positioned to build the analytical framework that helps provide the best information to decision-makers in a timely manner.

John Lawhorn is Senior Director of Economic and Policy Studies for MISO. He oversees MISO’s economic assessments and evaluation of transmission planning, as well as special strategic studies such as the impact of all proposed environmental legislation and regulations.

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