RGGI Leakage Workshop Presentation June 15, 2006 Stephen J. Rourke Vice President, System Planning ISO New England

RGGI Leakage Workshop PresentationJune 15, 2006

Stephen J. RourkeVice President, System PlanningISO New England

2006 © ISO New England

2RGGI Leakage Workshop, VermontJune 15, 2006

Presentation Objectives

• Provide an overview of ISO New England– Physical characteristics– Transfer limits and historical flows– Leakage from New England RGGI cap

• Comments on Leakage



Introduction

• ISO New England supports environmental objectives in the draft Model Rule

• However ISO New England has concerns– How leakage will be resolved– Need for offsets



Leakage Guidelines

• Should be easily administrated

• Should not impact system reliability or market efficiency

• Other CO2 regulations outside of RGGI will tend to dampen leakage– Canada’s Kyoto compliance– MA 7.29 regs

• Leakage is not energy from hydro, biomass, wind or fossil plants with CO2 offset credits



New England’s Electric Power System

• 14 million people; 6.5 million households and businesses

• 350+ generators/power plants

• 8,000+ miles of transmission lines

• 12 interconnections to neighboring systems

• 32,000 MW total supply

• All-time peak demand: ~26,885 MW on 7/27/05

• Eight (8) Pricing Zones

ISO

an

d Lo

cal C

on

trol C

en

ters

320 mi.

400 mi.650 km

ISO

an

d Lo

cal C

on

trol C

en

ters

520 km

2005 Capacity & Energy in New England

Other Renewables

2.9%

Hydro5.4%

Pumped Storage

5.4%

Coal9.2%

Nuclear14.2%

Oil24.3%

Gas38.6%

Gas27.9%

Oil/Gas12.0%

Oil4.1% Nuclear

25.0%

Coal11.8%

Coal/Oil3.2%

Pumped Storage1.0%

Hydro4.9%

Misc.5.5%

Net Interchange4.6%

Summer Capacity: 30,940 MW Energy: 138,195 GWh

Note: Units in the “Misc.” category include Other Renewables (biomass, landfill gas, refuse and wind) and Settlement Only Generators. Energy includes pumping energy.



ISO New England’s Interconnected World

2

3

1110

9

87

6

5

4

1

New England Control Area

• Interconnections: 11– New York (8)– Québec (2)– New Brunswick (1)



ISO New England External Transfer Limits

Map Number InterfaceTransfer Limit –

MW

9 New Brunswick700

(1,000 in 2008)

11Hydro Quebec Comerford/Sandy Pond

1200 – 2000(Varies with System Conditions)

10 Hydro Quebec – Highgate 200

1 – 7New York w/o Cross Sound Cable

1175/1150 (in/out)

8 Cross Sound Cable 346/330 (in/out)

New England - New YorkNet Tie Flows – 2005

- 2500

- 2000

- 1500

- 1000

- 500

0

500

1000

1500

1 1001 2001 3001 4001 5001 6001 7001 8001

Number of Hours

Ho

url

y F

low

: I

mp

ort

s ar

e N

egat

ive

(MW

)

New England - Hydro QuebecTie Flows – 2005

- 2500

- 2000

- 1500

- 1000

- 500

0

500

1000

1500

1 1001 2001 3001 4001 5001 6001 7001 8001

Number of Hours

Ho

url

y F

low

: I

mp

ort

s ar

e N

egat

ive

(MW

)

New England - New BrunswickTie Flows – 2005

- 750

- 500

- 250

0

250

1 1001 2001 3001 4001 5001 6001 7001 8001

Number of Hours

Ho

url

y F

low

: I

mp

ort

s ar

e N

egat

ive

(MW

)



Seven RGGI States and NE Generation

StateTotal Gen

MWRGGI

Gen MW

ME 3,268 2,466

NH 4,055 2,158

VT 827 107

MA 12,138 0

RI 3,147 0

CT 7,506 4,800

Total 30,941 9,531



RGGI State CO2 Caps (Allowances)

StateCO2 Cap

Million (Short) Tons

Connecticut 10.70

Maine 5.95

New Hampshire 8.62

Vermont 1.23

New York 64.31

New Jersey 22.89

Delaware 7.56

Total 121.25

26.5



Typical Generator Emission Cost Adders: SO2, NOx and CO2

CO2 allowance cost does not appear to change the relative dispatch order of typical fossil plants

Fuel Prices ($/MBtu): Gas & Oil 7; Coal 2.25

Allowance prices ($/ton): SO2 1,085; NOx 2,800; CO2 10

New

Fuel SO2 NOx CO2

Total w /o CO2

Total w / CO2

Combined Cycle – Gas

7.00 7,000 120 5 49.0 0.0 0.1 2.1 49.1 51.2

Peaking Steam – Oil

7.00 10,500 160 5 73.5 11.5 4.4 4.2 89.4 93.6

Base Load Steam – Coal

2.25 8,889 210 5 20.0 4.7 4.4 4.7 29.1 33.8

CO2 Content (Lb/Btu)

Heat Rate (Btu/kWh)

Fuel Cost ($/MMBtu)

Typical Plant

CO2 Allowance

Price ($/ton)

Costs $/MWh

ISO New England RGGI Study Results Vary Allowance Prices

New England RGGI Units CO2 Emissions vs. CO2 Allowance PriceAssumes No Resource Additions and Allows Leakage

0

5

10

15

20

25

30

35

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Year

CO

2 E

mis

sio

ns

Fro

m N

E R

GG

I Un

its

(Mill

ion

to

ns)

$0 $5 $10 $20

$0$5

$10

$20

CO2 Price

NE RGGI Cap = 26.5 millions tons

ISO New England RGGI Study Results Leakage

• Leakage: CO2 emissions from small units in RGGI States and units in non-RGGI States

• For an allowance cost of $10/ton, the RGGI cap causes total CO2 leakage in 2015 from non-RGGI units in New England of over 3 million tons

20

25

30

35

40

45

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Year

To

tal R

GG

I Em

iss

ion

Le

ak

ag

e (

Mill

ion

to

ns

)

Base

Base_10

ISO New England RGGI Study Results New England’s Sources of Energy

• Assuming $0 cost for CO2 produced by imports and non-RGGI units

• HQ and NB modeled as price sensitive sources• RGGI cap increases the imports and decreases the

percentage of fossil fuel usage — coal, oil, and gas

61.3% 60.3%

Energy Production for All New England Generators – 2015

(a) Base Case _ No Cap

Nuclear22.2%

Oil5.9%

Coal12.9%

Net Interchange

5.4%

Renewable11.2%

Gas42.5%

(b) Base _ With Cap @ $10/ton

Nuclear22.2%

Coal12.6%

Oil5.6%

Renewable11.2%

Net Interchange

6.2%

Gas42.1%



ISO New England RGGI Study Results Leakage

• ISO New England Study shows CO2 leakage in MA and RI increases by 3.4 million tons at an allowance price of $10/ton.

• With RGGI cap, net CO2 reduction in all of NE is about 1 million tons

• Net Energy Interchange increases from 5.4% to 6.2%



ISO New England Comments on Leakage

• ISO New England cannot determine the emissions of imported power from non-RGGI regions

• Leakage mechanisms should recognize non-RGGI CO2 regulations– Allow leakage from Canada and MA?– Allow RPS imports?

• A practical solution is to use average system emission rates times energy from the importing area



ISO New England Comments on Leakage(cont.)

• Leakage controls should not affect power flows so as to impede electric system reliability and market efficiency

• Leakage controls could be done through financial mechanisms, e.g., allowances to cover emissions

• RGGI should use existing ISO/RTO information and settlement systems

Documents

RGGI Leakage Workshop Presentation June 15, 2006 Stephen J. Rourke Vice President, System Planning ISO New England