Grid operator laments lack of action on carbon pricing

THE CEO OF THE REGION’S power grid operator indicated on Wednesday that he was surprised at the reluctance of New England states to embrace a price on carbon.

Many of the states are pursuing aggressive greenhouse gas reduction goals, but so far they have shied away from putting a price on the carbon content of fuels used to generate electricity. Even Vermont has backed away from the idea, said Gordon van Welie, the CEO of ISO New England, during a conference call with reporters on the state of the grid.

“I would have thought Vermont would have taken the lead,” he said, an apparent reference to the state’s reputation for pro-green policies.

For van Welie, carbon pricing is a means to an end. He manages the region’s competitive wholesale electricity market, which has been struggling of late as states like Massachusetts have started contracting on their own outside the market for renewable forms of energy such as offshore wind and hydro-electricity from Canada. Putting a price on carbon would theoretically balance out the up-front costs for electricity produced using the sun and wind and electricity produced using fossil fuels, and allow one market to function for both.

“Establishing a realistic price on carbon would be an elegant and simpler way to achieve clean-energy goals through the markets without distortion,” he said in a conference call with reporters.

Van Welie acknowledged that carbon pricing can be regressive, with the cost impact falling disproportionately on low-income people. He also said states are reluctant to give up control over the pace of decarbonization to others, whether it’s other states or a regional grid operator under the direction of the Federal Energy Regulatory Commission.

Asked why ISO New England doesn’t just implement carbon pricing as part of the electricity markets it oversees, van Welie said the grid operator lacks the jurisdiction to do that on its own.

The New York grid operator, however, is developing a proposal to implement carbon pricing in the electricity markets it oversees. The New York grid operator is working with state officials and other players to develop the proposal, which was released in draft form in December. Officials say that, if the New York talks lead to a concrete proposal, it would still need approval from the Federal Energy Regulatory Commission.

Van Welie indicated there is far less support for carbon pricing in the New England states. He said he and the agency he oversees have made their support for carbon pricing clear in talks with governors and other officials across the region. “Everyone is aware of our position,” he said.

Here’s what van Welie had to say on other issues:

Solar shift.  Van Welie noted April 21, 2018, a sunny Saturday, was a historic day for the New England power grid. It was the first time ever that the region’s residents drew more power from the grid while they were sleeping overnight than during the middle of the afternoon. The explanation was that solar power arrays generated enough electricity during the day to reduce the amount of power drawn from the grid; at night, when the sun was down, no solar power was being generated and homes and businesses had to rely more on grid power.

Gas pipeline not happening. Van Welie has totally abandoned any hope for a new pipeline bringing more natural gas into the region. “We do not think we’re going to see any significant pipeline expansion into the region and we’re going to have to work with what we have,” he said.