State Headliners: New England power grid prez backs carbon tax, in ‘Red Green’ fashion

By Guy Page

Question: What “good news” will the chief executive of New England’s power grid bring the Vermont renewable power industry at its annual trade meeting this week?

Answer: he supports a carbon tax.

Gordon Van Welie is President/CEO of ISO-New England, overseers of the region power grid. ISO-NE has a lot of say on how your electricity gets produced, transmitted and paid for. Until now, ISO has insisted on buying the lowest-cost power and not favoring any form of generation over another.

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Guy Page is affiliated with the Vermont Energy Partnership, the Vermont Alliance for Ethical Healthcare, and Physicians, Families & Friends for a Better Vermont.

But both of those hallowed principles seem to be weakening under the heavy pressure of state renewable power mandates.

ISO prefers a carbon tax because a carbon tax is someone else’s renewable power mandate problem. Right now, it’s their problem. And their solution is unpopular.

ISO has proposed CASPR, a plan to let “retiring” (a/k/a going out of business) power plants transfer their power-generation legal obligations to more expensive, intermittent wind and solar power generators. Before CASPR, expensive big wind and solar projects had no reliable path to an ISO-NE deal.  CASPR lets big wind and solar projects through the regulatory back door.

Van Welie explained the appeal of carbon tax over CASPR in the February, 2018 RTO Insider, a power transmission news website:

The most effective way to achieve the states’ environmental objectives is to put an appropriately high price on carbon, van Welie said, because it would spur investment in cleaner resources.

“That could be the most efficient way of doing it through a wholesale market mechanism,” van Welie said. “It would allow us to avoid making this CASPR proposal that we recently filed at FERC. But we do understand that’s not the preferred choice of the states, and we respect that, and hence we have come up with this method for accommodating what they’re doing through above-market contracts.”

To paraphrase: ISO would prefer state legislatures do the responsible, upfront thing: bill voters for the extra cost of renewable power mandates enacted in their name. But — surprise, surprise! — legislatures would rather hide the cost of expensive renewable power by having the grid send ratepayers the bill. ISO is willing to accommodate. Like CBC’s Red Green, it is saying, “I can change. If I have to. I guess.” But since no-one likes to be the fall guy, ISO would prefer state legislatures take responsibility for the laws they passed and give the bill to their customers — the voters.

CASPR is kind of like letting your credit-challenged nephew take over the payments for a car you don’t want to drive anymore. Good news for the nephew — not so much for the risk-averse bank, which in this case is the New England power customer.

New England already pays more for electricity than any other region. Either CASPR or carbon taxation will surely cost consumers even more.  It might be better to give minimal support to low-carbon nuclear power plants, and build more transmission for Canadian hydro power.

In the last five years, New England solar power has grown ten-fold, to about 2400 megawatts (MW). Almost 9,000 MW of off-shore wind has been proposed. Full acceptance of CASPR will signal Big Solar and Wind that they will have a long, lucrative career in New England, provided enough existing power plants close and transfer their obligations. Smelling blood, the renewable industry likely will increase pressure for closure of New England’s existing low-cost, low-carbon, baseload nuclear power plants, as well as the backup coal and oil-burning plants that kept the lights on during the Big Freeze of last December-January.

ISO’s support of a carbon tax in lieu of even less-appealing CASPR is great news for the Vermont and regional renewable power industry. Either way, they win. For ratepayers, it’s a choice between the rocks or the whirlpool. Someone, please turn this boat around.

Nuclear Regulatory Commission backs Vermont Yankee sale

The U.S. Nuclear Regulatory Commission Friday, Oct. 12 announced it approved the Vermont Yankee license transfer from Entergy to NorthStar Services Group, a New York-based decommissioning firm.

The approval shows the environmental and financial soundness of NorthStar’s plan to decommission the former nuclear power plant in as soon as eight years.  The Vermont Public Utilities Commission is expected to deliver its decision this month. If approved, NorthStar will likely own the site before Jan. 1.

The NRC decision was welcomed by Vernon and Windham County officials, as well as the Vermont Energy Partnership, for its safety, environmental benefit, and positive economic impact. For more information see VTEP press statement.

Statehouse Headliners is intended primarily to educate, not advocate. It is e-mailed to an ever-growing list of interested Vermonters, public officials and media. Guy Page is affiliated with the Vermont Energy Partnership; the Vermont Alliance for Ethical Healthcare; and Physicians, Families and Friends for a Better Vermont.

Images courtesy of Wikimedia Commons/Infrogmation and Page Communications

7 thoughts on “State Headliners: New England power grid prez backs carbon tax, in ‘Red Green’ fashion

  1. Guy,

    Hydro-Quebec Export Electricity: H-Q net exports were 34.4 TWh/y in 2017; provided 27% of H-Q net income, or $780 million, i.e., very profitable.

    H-Q export revenue was $1,651 million in 2017, or 1641/34.4 = 4.8 c/kWh. See page 24 of Annual Report URL.
    This is for a mix of old and new contracts.

    Revenue = 1641
    Net profit = 780
    Cost = 1641 – 780 = 861
    Average cost of H-Q generation = 861/34.4 = 2.5 c/kWh

    GMP buys H-Q electricity, at the Vermont border, for 5.549 c/kWh, under a recent contract.
    GMP sells to me at 19 c/kWh, per rate schedule.

    H-Q is eager to sell more of its surplus electricity to New England and New York.

    It is entirely political what consumers PAY for that electricity.
    That is implemented by rate setting, taxes, fees, surcharges, etc., mostly on household electric bills, as in Denmark and Germany, etc.

  2. Guy,
    “It might be better to give minimal support to low-carbon nuclear power plants, and build more transmission for Canadian hydro power.”

    You keep calling for more transmission to Canada
    Canada could add to its current exports at most 12 TWh.
    Canada could perform balancing, if there were more robust connections, just as Germany and Denmark do balancing with Norway’s hydro plants.

    Current NE grid load was 121.061 TWh in 2017
    Converting ALL LDVs (cars, SUVs, minivans, 1/4-ton pick up, short and long wheel base) adds at least 56.543 TWh

    High Levels of Wind and Solar

    High levels of wind and solar, say 60% of NE grid annual load (the rest supplied by sources), could not ever stand on their own, without the NE grid having much more robust connections to nearby grids (Canada, New York State), plus gas turbine plants and reservoir/run-of-river hydro plants that could quickly vary their outputs to compensate for the quickly varying outputs of wind and solar, including very low outputs of wind and solar, which occur at least 30% of the hours of the year, according to minute-by-minute generation data posted by ISO-NE.

    If no gas turbine, nuclear, coal and oil plants (they would be closed in the near future, according to RE proponent wishes), but with existing connections to nearby grids and existing reservoir/run-of-river hydro plants and existing other sources, the NE grid would require 6 – 8 TWh of storage to cover 5 to 7 day wind/solar lulls, which can occur anytime of the year, and to cover seasonal variations (storing wind and solar when they are plentiful so their electricity would be available when they are not). That storage would need to have a minimal level at all times to cover multi-day, scheduled and unscheduled equipment and system outages and unusual multi-day weather events (big snow fall covering the solar panels, no wind). One TWh of storage costs about $400 billion, at $400/kWh, or $100 billion at a Holy Grail $100/kWh. Any electricity passing through storage would have a 15 to 20 percent loss on an AC-to-AC basis.

  3. Do the people who back a carbon tax ever think about the average people who work for a living and have to drive to a job?

    • Homer, the legislative sponsors of carbon taxes are overwhelming from affluent, urban, short commute, public transit, energy efficient new home Chittenden County. These towns won’t be hurt by CT. But others will, especially in Northeast Kingdom.

  4. “Until now, ISO has insisted on buying the lowest-cost power and not favoring any form of generation over another.” That seems like the best bet for ratepayers. Why make electricity more expensive by insisting on wind and solar? Reliable, dispatchable generators are paid for their capacity whether they are generating or not because we need them to be there when wind and solar are absent. That means wind and solar are simply an unnecessary additional cost to ratepayers as a whole.

    • I agree, Steve. There are good reasons to include wind and solar, but not with disadvantage to consumer and threat to grid reliability. Thanks for your comment

      • Guy,

        Wind and Solar Far From Competitive with Fossil in New England:
        The Conservation Law Foundation claims renewables are competitive with fossil. Nothing could be further from the truth. Here is a list of NE wholesale prices and Power Purchase Agreement, PPA, prices.

        NE field-mounted solar is 12 c/kWh; competitively bid
        NE rooftop solar is 18 c/kWh, net-metered; GMP adds costs of 3.813 c/kWh, for a total of 21.813 c/kWh
        NE wind offshore, until recently, was about 18 c/kWh. See Note.
        NE wind ridgeline is at least 9 c/kWh
        DOMESTIC pipeline gas is 5 c/kWh
        Russian and Middle East imported LNG is at least 9 c/kWh
        NE nuclear is 4.5 c/kWh
        NE hydro is 4 c/kWh; about 10 c/kWh, if Standard Offer in Vermont.
        Hydro-Quebec imported hydro is 6 – 7 c/kWh; GMP paid 5.549 c/kWh in 2016, under a recent 20-y contract.
        NE annual average wholesale price about 5 c/kWh, unchanged since 2009, courtesy of low-cost gas and nuclear.

        NOTE: Vineyard Wind, 800 MW, fifteen miles south of Martha’s Vineyard, using 8 or 10 MW turbines, 750 ft tall.
        Phase 1 on line in 2021, electricity offered at an average of 8.9 c/kWh over 20 years
        Phase 2 offered at an average of 7.9 c/kWh over 20 years

        NOTE: The NE grid is divided in regions, each with Local Market Prices, LMPs, which vary from 2.5 – 3.5 c/kWh from 10 pm to about 6 pm; slowly increase to about 6 – 7 c/kWh around noon time, when solar is maximal; are about 7 – 8 c/kWh in late afternoon/early evening (peak demand hours), when solar is minimal. Unusual circumstances, such as power plant or transmission line outages, can cause LMPs to increase to 20 – 40 c/kWh, and even higher when such events occur during peak demand hours.

        NOTE: The above prices would be about 50% higher without the subsidies and even higher without cost shifting.

        NOTE: Here is an ISO-NE graph, which shows for very few hours during a 13-y period were wholesale prices higher than 6 c/kWh. Those prices are low because of low-cost gas, low-cost nuclear and low-cost hydro. The last four peaks were due to:

        – Pipeline constraints, aggravated by the misguided recalcitrance of pro-RE Governors of NY and MA
        – Pre-mature closings of coal and nuclear plants
        – Lack of more robust connections to nearby grids, such as New York and Canada.

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