On April 29, the PJM Interconnection said stakeholders are leading an initiative to build a framework enabling jurisdictions to incorporate their carbon-pricing policies into PJM’s markets while mitigating the policies’ impact on surrounding areas not participating in such programs.

The Markets & Reliability Committee on April 25 endorsed a problem statement and issue charge creating a senior task force to study the concept over the next 18 months before presenting its findings. The item received 3.92 support out of a possible 5 in a sector-weighted vote.

As one member who represents industrial power customers put it: Each state can set its own requirement, and PJM can provide a mechanism through which the cost of carbon is refunded to the state, which can decide what to do with the money.

A significant portion of the new group’s education and analysis would address “leakage,” a dynamic that occurs when energy produced by higher-emitting generators located in a region where carbon is not priced is imported into an area where it is, displacing lower-emission resources.

Unchecked, leakage can affect generator investment decisions, the goal of reducing emissions and consumer costs in all areas, according to the problem statement.

The item was brought forward by Eastern Generation, Public Service Electric & Gas, CPV Power Holdings, NextEra Energy Marketing and Dayton Power & Light Co.

PJM has been studying the impact of carbon-pricing policies and potential market rules for some time. In 2017, it published a white paper analyzing potential regional and sub-regional frameworks.

 It concluded that a regional approach is preferred, but recognized that a single perspective on carbon is not shared by states within its footprint.

Among the first education and analysis items listed for the task force is reviewing mechanisms for local jurisdictions to opt in or out of a carbon-pricing construct.

Click Here for more information on PJM committee actions.

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[Posted: April 29, 2019]

5/6/2019