# Presentation: 487033

## TRADING ENVIRONMENTAL ATTRIBUTES OF ELECTRIC POWER

***Joanne Morin***
***Air Resources Division***
***Jmorin @des.state.nh.us***
***603-271-5552***

## Grandfathered Power Plants

*** ******Clean Air Act exempted plants built before 1977 from emissions limits***
***Controls required if significant modification made (New Source Review-NSR)***
***NSR in litigation***
***Proposals to relax/clarify NSR***

**Notes:**

Primary proposal is for 3 or 4-P emissions limits for grandfathered plants
SO2
NOx
Mercury
CO2

## Massachusetts Regulation

***Multi-pollutant regulation affecting the 6 highest-polluting plants:***
***1.5 lbs/MWh NO******x***
*** ******3.0 lbs/MWh SO******2***
***Mercury standards to be proposed***
***1800 lbs/MWh***

**Notes:**
DEP Regulation 310 CMR 7.29
Mercury limits will be based on:
Stack testing and an evaluation of technology options for mercury control

Time lines
		Standard	Repowering pathway
NOx		oct 1 2004	Oct 1 2006
SO2		Oct 1 2006	Oct 1 2008
CO2		Oct 1 2006	Oct 1 2008

## CO2 Compliance

***Can purchase offsets as long as they are:***
***Real***
*** ******Surplus***
***Verifiable***
***Permanent***
***Enforceable***

**Notes:**
DEP Regulation 310 CMR 7.29
Mercury limits will be based on:
Stack testing and an evaluation of technology options for mercury control

Time lines
		Standard	Repowering pathway
NOx		oct 1 2004	Oct 1 2006
SO2		Oct 1 2006	Oct 1 2008
CO2		Oct 1 2006	Oct 1 2008

## New Hampshire 4-P Bill

***Multi-pollutant regulation affecting the 3 grand fathered  plants:***
***NO******x ******reduced 70% from 1999 levels***
*** ******SO******2 ******reduced 87% from 1999 levels***
***Mercury standards to be proposed***
***CO2 reduced  to 1990 levels by 2007 with second level to be proposed for post 2010***

**Notes:**
Allowances output based with the same emission rates as Mass:
1.5 lbs/MWh NOx   3644 tons annually
 3.0 lbs/MWh SO2   7289 tons annually
5,425,866 tons annually
Mercury standards to be proposed

## New Hampshire 4-P Bill

***Emissions trading allowed for NO******x , ******SO******2, ******CO******2 ***
***Voluntary expenditures for energy efficiency, renewable energy, and conservation programs can converted into allowances***

**Notes:**
Allowances output based with the same emission rates as Mass:
1.5 lbs/MWh NOx   3644 tons annually
 3.0 lbs/MWh SO2   7289 tons annually
5,425,866 tons annually
Mercury standards to be proposed

## Other Public Policy Mandates

***Renewable Portfolio Standards***
***Emission Portfolio Standards***
***Disclosure regulations***
***Green Marketing claims***

## New England GIS

***NE-GIS is an ***
***Accounting System ***
***For ***
***Generation Attributes***

## Who Made up the Rules?

***New England Power Pool (NEPOOL)***
***Runs the electricity markets and manages the grid for 6 New England States***
***Design details in “Operating Rules” available at www.nepoolgis.com***

## Design Contraints

***Minimize gaming***
***Preserve right of states***
***Support customer choice***
***Use revenue quality data***
***Minimize impact on energy markets***
***Affordable***

## Stakeholder Process

***NEPOOL and the Independent system Operator***
***Market players – generators, distributers, retail suppliers, marketers***
***Regulators – environmental offices, energy offices, public utility commissions***
***Other interested parties - NGOs***

## Timeline

***1999 Stakeholder Working Group formed***
***2000 NEPOOL Participants Committee approved design***
***2001 RFP for Administrator (APX hired)***
***June 2002 First Trading Period***

## GIS Concept

***Web-based***
***Use ISO-MSS data for volume of electricity***
***Create “one certificate” for each MWh***
***All CERTIFICATES start with generators***
***All CERTIFICATES end with retail sellers***
***CERTIFICATES used for compliance***

## Certificate Fields

***Asset information***
***Fuel source***
***Emissions (not allowances)***
***RPS eligibility (ME, CT, MA)***
***Labor characteristics***
***Vintage***
***MWhs generated***
***Location***

## GIS Operation 

***Monthly megawatt hours***
***Quarterly emission data***
***Certificates for Jan-Mar trade July-Sept***
***Final reports on certificates for Jan-Mar available Sept. 20***
***Accounts for generator, LSE, trader and regulator***

## GIS Operation continued

***Certificates not claimed – residual mix***
***All certificates assigned to total load (system whole)***
***Generators not submitting emissions – assigned dirtiest for that fuel***

## Other Design Elements

***Imports – System power except for renewables***
***Behind-the-meter generators (<5 MWs)***
***Reserve accounts***
***Dual fuel***

## Experience To Date

***Working out QA/QC on emissions***
***All certificates settled***
***Nuke offered CO2 for sale***
***Trades @ $25 to $35 per MWh***
***Future Contracts***

## Pros/Cons

***Credible/Affordable/Transparent***
***Does not encumber electricity market***
***Revenue from market demand goes back to renewable generator***
***Renewable generation delivered to grid***
***Con – complex to consumer (utility can buy energy from coal and disclose wind via certificates)***