6. C02 PRICE FORECASTS IN UTILITY IRPs 

A growing number of electric utilities include projections of the expected costs associated with 

greenhouse gas emissions in their resource planning. In addition to the pool of recent IRPs reviewed for 

this forecast, which are characterized below, Synapse has previously conducted an extensive study of 

resource plans dating back to 2003: 

• None of the 15 IRPs published from 2003-2007 that we reviewed included a C02 price 

forecast. 

• Of the 56 IRPs from 2008-2011 that we reviewed, 23 included a C02 price forecast. This 

jump in the inclusion of carbon price projections in IRPs from 2008 onwards coincided 

with the introduction of the Waxman-Markey bill in Congress, which sought to legislate 

a cap-and-trade system. As a result of this bill, the inclusion of carbon pricing 

sensitivities in IRPs became paramount to prudent planning beginning in 2008; a 

majority of the IRPs in our 2015 review reflect an understanding that inclusion of a 

methodology to reflect future environmental regulations is prudent planning. 

• Of the 115 IRPs released in 2012-2015 reviewed by Synapse (referred to below as our 

"current sample"), 66 include a C02 price in at least one scenario, including 61 with a 

C02 price in their reference case scenario (53 percent). 

• Moreover, of the 24 IRPs released in 2014-2015 reviewed by Synapse, 20 include a C02 

price in at least one scenario, of which 19 include a C02 price in their reference case 

scenario (79 percent). 

These data show that the resource plans in the current sample includes a similar fraction of IRPs with a 

C02 price forecast as the 2008-2011 sample, when major climate bills were actively under consideration 

(57 percent in 2012-2015 as compared to SO percent in 2008-2011}. 

Table 2: IRP database summary statistics 

2003-2007 15 0 

-9 2008-2011 56 23 

2012-2015 115 66 

2012-2013 91 46 

2014-2015 24 20 

How well does our current sample represent utility planning across the United States? A total of 3,412 

utilities operated in the United States in 2012.47 1n terms of generation, the top 5 percent-170 

47 

EIA Form 860, 2012 (Released Oct. 10, 2013). 

II Synapse Energy Economics, Inc. 2015 Carbon Dioxide Price Forecast 25 
utilities- accounted for 77 percent of total U.S. generation in 2012. Our sample includes IRPs from 33 

utilities within this largest 5 percent. Of those 33, 29 utilities have IRPs with non-zero C02 prices. This 

means that almost all of the IRPs we reviewed from the largest utilities in the country include a non-zero 

C02 price in their planning process. 

Not all utilities produce IRPs. In fact, 11 states have no filing requirements for long-term planning, while 

10 other states require long-term plans, but not IRPs.

48 While long-term planning is an important part of 

the procurement process in regions with wholesale energy markets, traditional utility-centric IRPs are 

less common. As a result, regions with wholesale markets are not well represented in our sample. 

Figure 5 below displays non-zero reference case C02 price forecasts from 46 utility IRPs over the period 

of 2014-2044.49 Although we refer above to 61 non-zero C02 price reference case forecasts in the 

current sample, fifteen of these forecasts are excluded from this chart for various reasons. In some 

cases, our sample includes IRPs from companies in 2012 and 2014, in which case we only include the 

most recent forecast. The remaining non-zero forecasts that are not included in the figure below are 

from companies that operate in multiple states but produce the same C02 forecast, are confidential, or 

forecast a price that begins following the end of the IRP planning period. 

48 

49 

See: Wilson, R. and B. Biewald. Best Practices in Electric Utility Integrated Resource Planning. June 1, 2013. Synapse Energy 

Economics. Available at: http://www.synapse-energy.com/Downloads/SynapseReport.2013-06.RAP.Best-Practices-in-IRP.13-

038.pdf. 

We also provide a figure showing only forecasts produced in 2014 and 2015 in Appendix A. These forecasts do not appear 

materially different than the range of 2012 to 2015 forecasts shown below. 

II Synapse Energy Economics, Inc. 2015 Carbon Dioxide Price Forecast 26 
Figure 5: Utility non-zero and non-confidential reference case forecasts from 2012-201550 

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-NV Nevada Power (2012} Mod-carbon case 

-WA Seattle Clty light (2012} 

-NM/TX El Pa1o Elec. (2012} 

-oR Portland G&E (2012} 

- CA PWP (2012} 

-Ole Public Service Co of OK (2012} Fleet Tramitlon: CSAPR 

-wA Tacoma Electric (2012} 

--ID Idaho Power (2013) 

-IN Duke Energy Indiana (2013} 

-AK Alaska Energy Authority (2012} Medium 

-IN Indiana Municipal Power Agency (2013} Reference 

- wA Puget Sound Energy (2013}8ase 

- WA Grays Harbor PUD (2012} 

--MT NorthWestern Energy (2013} 

--sc sceG (2012)8ase 

- OK OG&E (2014} Reference 

MO Ameren MO (1014} Mod Case 

IN Vectren (2014} 1RP Base Case 

CT CT DEEP (2014} RGGI 

A2 UniSource Energy (2014} 

WA Cowlitz PUD (2014) Federal 

NC·SC Duke Energy Progress (2014} Woth C02 

lA Entcrgy lA Draft (2015} Reference case 

- uT PacifiCorp 2012 Base Case (S16 C02} (Dec 2011} 

-NM Southwestern PS (2012} 

-oR Paciflcorp (2013}8a1e 

-CA lADWP (2012} 

-WNOR CascadeNW (2012} 

- WA Cowlin PUD (2012} 

- NE NPPO (2013} 

--HI HECO (2013} 

-IN/MIIN·MI Power (2013} 

-co Colorado Springs Utilities (2012) Low 

-MN-Wl Great River Energy (2012} Mid 

--WA Snohomish County PUD (2013} Base carbon Price 

--NY ConEd (2012} RGGI 

- LACLEC0(2013} 

NC/SC Duke Energy Carolinas (2014} Base 

NC/VA Dominion 2014 Carbon (2014} 

- VT Green Mountaon Power (2014}Lacapra RGGI Forecast 

A2 APS (2014) Base Case 

NM PNM (2014} Reference 

WA Benton PUO (2014} Federal 

lA SWEPCO (prelim} (2015} Base 

A2 Tucson Electro< Power (2014} 

KS Kansas City BPU (2014} Base C02 

50 A number of non-zero, non-confidential reference case forecasts are excluded, discussed further on page 24. 

Synapse Energy Economics, Inc. 2015 Carbon Dioxide Price Forecast 27 
Four of the utility forecasts displayed in Figure 5 are particularly low in the context of the other 

forecasts. Two IRPs from the Northeast-Commonwealth Edison of New York and the Connecticut 

Department of Energy and Environmental Protection- base their reference case forecasts on RGGI 

prices before the recent RGGI revisions discussed in Section 4, resulting in prices just under $2 per short 

ton. Two other IRPs-Puget Sound Energy and Snohomish County PUD-use a Washington State 

mandated C02 price of $0.32 per short ton for their base case analyses. 

The five utilities that assume a $0 C02 price in their reference cases also consider several additional nonzero scenarios. Th ese are provided in Appendix A. 5

1 

Table 3 summarizes the range of C02 prices forecasted for 2020 and 2030. Not all forecasts start by 

2020, and those that do are generally below $20 per ton. Of the utilities with a non-zero C02 price, all 

but four assume a price in 2025. 

Table 3: Number of utility C02 Forecasts from 2012-2015 in several price ranges in 2020 and 2030 

Compliance Year 

2020 2030 

>$0- <$10 14 5 

$10-$20 17 18 

$20-$30 6 11 

$30 - $40 2 2 

>$40 0 4 

7. OVERVIEW OF THE EVIDENCE FOR A FUTURE C02 PRICE 

Our C02 price forecasts are developed based on the data sources and information presented above and 

reflect a reasonable range of expectations regarding future efforts to limit greenhouse gas emissions. 

The following evidence has guided the development of the Synapse forecasts: 

• Regulatory measures limiting C02 emissions from power plants will be finalized in the 

near term. The EPA has proposed emissions standards for new and existing power 

plants under Section 111(d) of the Clean Air Act, to be finalized by mid-summer 2015. 

These actions represent an effective price that will affect utility planning and 

operational decisions. 

• Environmental regulation can, and often does, evolve incrementally over time. Initial 

awareness of environmental damages, followed successively by measurement and study 

Sllndianapolis Power & Light's "Environmental Case" C02 forecast is provided only as a trajectory with no values on its axes, 

and is excluded from Appendix A. 

II Synapse Energy Economics, Inc. 2015 Corban Dioxide Price Forecast 28