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REGIONAL INFRASTRUCTURE INITIATIVE: The Reliability, Price and Policy Implications of Geography

REGIONAL INFRASTRUCTURE INITIATIVE: The Reliability, Price and Policy Implications of Geography. NECPUC June 16, 2014 Tom Welch. NESCOE Initiative. MASS Global Warming Solutions Act (GWSA). Governor Patrick signed M.G.L. Ch. 21N into law in 2008 Primary statutory requirements

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REGIONAL INFRASTRUCTURE INITIATIVE: The Reliability, Price and Policy Implications of Geography

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  1. REGIONAL INFRASTRUCTURE INITIATIVE:The Reliability, Price and Policy Implications of Geography NECPUC June 16, 2014 Tom Welch

  2. NESCOE Initiative

  3. MASS Global Warming Solutions Act (GWSA) • Governor Patrick signed M.G.L. Ch. 21N into law in 2008 • Primary statutory requirements • Mandatory Reporting of GHG Emissions • Track Statewide GHG Emissions • Develop GHG Limits and Plans to Achieve Statewide Reductions • 2020: 25% below 1990 levels • 2050: at least 80% below 1990 levels • Clean Energy and Climate Plan (CECP) for 2020 • Climate Change Adaptation Report Source: EEA

  4. Clean Energy & Climate Plan (CECP) for 2020 • EEA released plan in December 2010 • Lays out an ambitious but practical framework to continue and accelerate the Commonwealth's transition to clean energy • Contains an integrated portfolio of strategies to reduce GHG emissions below 2020 GHG emission limit of 25% below 1990 levels

  5. GHG Reduction Opportunity • New hydroelectric imports are a potential source of significant clean energy to New England • Adding significant quantities of hydro (1,200 MW +) provides significant supply diversity and regional GHG reduction, minimal impacts on bills

  6. New England Basis Differential Is Increasing Source: Sussex PUC Study

  7. Estimate of Impact of AIM Plus 1.2 bcf

  8. Candidates Source: Sussex PUC Study

  9. NESCOE Initiative Status • Moving into NEPOOL process • Continuing to refine elements of initiative • Counterparties • Evaluation criteria

  10. Challenges • Additional Infrastructure doesn’t help everyone • Predictive uncertainty and potentially stranded costs balanced against observed price effects • Consistency with Federal Law • Impact on markets: return to IRP or neutral correction for disadvantageous geology?

  11. The Risk of Inaction • Politics of failure • Putting NE at a persistent substantial energy price disadvantage could put pressure on other objectives (e.g. funding for renewables, carbon reductions) • Failure of the market to anticipate and resolve the inter-regional disparity is already prompting re-thinking the value of markets • Reliability challenges continue to grow • “By January it had always been winter.” ― Annie Proulx, The Shipping News

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