DAY 1

Key Issues Relating to Clean Power Plan

Breakfast | 7:30

Welcome | 8:00-8:15 | Gary Vicinus, Andy Weissman

Session 1: CPP in Context | 8:15-9:00 | Melissa Haugh
This session will present an overview of the final Clean Power Plan (CPP) with a focus on key changes relative to the proposed rule and important components of the final rule that will be discussed in other sessions in the workshop. Topics to be covered include state-goal determination and impact on state compliance, rate- and mass-based compliance standards, emission leakage, and state planning under the final rule. This session will provide a summary of the rule as well as perspective and analysis to deepen understanding of the rule.  
        
Sessions 2 and 3: What is at Stake?
Future of the Industry Under CPP | 9:00-9:45 | Andy Weissman
Achieving a Reasonable Outcome | 9:45-10:30 | Gary Vicinus

There will be a lot at stake for utilities and other stakeholders in the state processes that will drive development of implementation plans. The speakers will illustrate how the options available to the states (or regionally) can have material impacts on utilities’ costs and rates.  

In addition, the CPP will result in significant changes to the gas industry, the renewable industry and the distributed energy business.  Nearly everyone will be impacted by the rule, and planning is required to for all directly and indirectly affected industries.  

This will be an interactive session that involves identifying the key risks and issues that need to be addressed based on participants current understanding of the plan.

Networking Break | 10:30-10:45

Recap Morning Session, Q&A | 10:45-11:00


Deeper Look into Emission Reduction Options

Session 4: Future Role of Gas and Nuclear | 11:00-12:15 |  Jim Diemer, Andy Weissman

After the proposed CPP was issued, many expected states to rely heavily on construction of new gas-fired generation to meet EPA’s CO2 emissions limits. The final rule, however, significantly limits the use of new gas-fired generation to achieve compliance, in part by adding a new “leakage” restriction on the use of new gas units to achieve compliance in states that opt for a mass-based approach. As a result of these restrictions, modeling conducted for EPA predicts that there will be less new gas-fired generation built under the CPP than was expected before the rule was adopted.

The speakers will address in depth the potential implications of these restrictions on future use of natural gas for electric generation, including EPA’s rationale for its new limitations, how the prohibition on leakage is likely to be applied, the potential impact on U.S. demand for natural gas and potential legal strategies for broadening the use of new gas-fired generation for compliance.

In addition, the final CPP raises major issues regarding the future of many nuclear units. Provisions in the draft plan factored in “at risk” nuclear generation into goal computation The final rule eliminates this provision and instead assumes that existing nuclear units will continue to operate in determining allowed future units, even if facilities are “at risk” due to license extension concerns or economics.

How to assess future closure decisions and value nuclear in compliance will be discussed. The speakers will also address implications for the nuclear industry in general and what it means for owners of existing generation, plants under construction and future development.  

Luncheon / Keynote    12:15-1:30

The keynote speaker will provide a pertinent perspective from either a state environmental official, an ISO official or a senior policy analyst on how the CPP will impact their business.

Session 5: Future Role of Energy Efficiency | 1:30-2:15 | Melissa Haugh

Although EPA eliminated its energy efficiency “building block” in computing future allowable emission goals, the modeling analysis conducted for the Agency estimates that increased expenditures on energy efficiency will still be a primary mechanism to achieve the emission reductions required by the program. EPA’s analysis estimates that up to $300 billion will be spent on new energy efficiency measures as a result of the program, reducing electricity demand in 2030 by 7.8%.

The final determination regarding how much to rely on energy efficiency and how to fund the required expenditures will be made by the states. The extent to which states decide to rely on energy efficiency has major ramifications for the future structure of the power industry, asset values and demand for future generation.

This session will present a means to assess energy efficiency in compliance both from a macro view nationally and from an individual perspective in initial compliance planning. Energy efficiency challenges and technologies will be covered as well.  

Key topics to be addresses in this session include:
•    The role of energy efficiency under the final CPP
•    How energy efficiency can contribute to compliance with CPP goals from mass- and rate-based standpoint
•    How to consider the economics of energy efficiency under the CPP in the course of planning and under various compliance approaches
•    Example assessments of energy efficiency for compliance
•    Monitoring and verification of energy efficiency – the need and challenges
•    Presentation of efficiency technologies and options for consideration in planning and compliance discussions

Session 6: Future Role of Renewables and DG | 2:15-3:00 | Bo Poats

The final CPP recognizes and incentivizes the use of new renewables as a means to compliance, providing more clarity and opportunities for renewables relative to the proposed rule. New to the final version of the CPP, for example, is the Clean Energy Incentive Program (“CEIP”), which provides credits for investments in RE and certain EE operational the two years preceding the compliance period start in 2022. This and other elements of the final CPP promote a larger contribution of RE to meet compliance than the proposal.
   
In evaluating the potential contribution of RE, both grid-scale and distributed, a number of key issues must be evaluated at the state, company and national level.  At the national level, potential continuation of Investment Tax Credits (ITCs) for solar and Production Tax Credits (“PTCs”) for wind remains a key issue. At the state level, the potential role of more aggressive state RPS standards looms as a tools to get maximum leverage from the ERC program for compliance.

As with the other elements of the CPP, the onus is on the states to identify the combined lowest cost and highest benefit stream compliance plan.  This includes working out utility allocation and burden sharing on an equitable and reasonably transparent basis.  With this background, several key issues that need to be addressed include:  
•    Implications for the potential compliance role of renewables under rate-based and mass-based programs, both at the utility/grid scale vs. the distributed scale of application;
•    State and utility capacity for managing renewable integration into the transmission and distribution grid in economic quantities without creating secondary system cost and reliability impacts;
•    Relative costs of renewables as compliance mechanism vis-a-vis other investment alternatives (coal retrofit, gas investment, transmission, etc.); and
•    Implications for the potential size and state-wise utilization of the CEIP – i.e., the potential penetration and scale “early” renewable energy under the CEIP and potential supplemental state incentives.

Networking Break | 3:00-3:15


Emission Trading and Grid Operation Considerations

Session 7: Key Issues in Emissions Trading | 3:15-3:45 | Andy Weissman

This session will discuss different ways in which emissions trading programs can be structured, both on the state level and regionally. Widespread use of allowances could create $500 billion or more in tradeable credits during the first 10-15 years of the program.

This session will examine:
•    Potential mechanisms for allocating allowances (e.g., who will be entitled to receive, the criteria for allocating, possible use of auction mechanisms, etc.);
•    Lessons learned from earlier trading programs;
•    How program structure will affect power prices and operating margins for different types of generation;
•    EPA’s rules with respect to “Emission Reduction Credits” created by EPA’s Clean Energy Incentive Program;” and
•    Potential use of credits to fund energy efficiency and renewable energy.

Session 8: Changes to Electric Grid and Rules | 3:45-4:15 | Andy Weissman, Pat Augustine

One of the possibilities out of the CPP is that interstate trading could result and it logically could impact portions of current ISOs.  This possibility raises a number of concerns for ISO’s such as:

What if all but one or two states within an ISO want interstate trading and the remaining states don’t?  There would be an effective price for carbon in most states but those that do not, could potentially dispatch at a lower cost than those that have an effective carbon price embedded.  

What would this mean for equity within an ISO and how would it have to change rules to protect its market principles?

Issues to be discussed in an interactive dialogue with participants are:
•    What types of Implementation Strategies will impact ISOs the most and how is it likely to impact rules going forward?
•    Will ISOs be the likely driver of interstate trading (will trading be formed along ISO lines) and what are the hurdles to be overcome for this to work?
•    How will ISO’s evolve if interstate trading becomes a favored mechanism?
•    What types of gaming are possible that must be addressed in this regulatory framework?

Recap Afternoon Session, Q&A | 4:15-4:30

Networking Reception | 4:30-5:30


DAY 2

Compliance Planning Under Uncertainty

Breakfast | 7:30

Recap Day 1, Q&A | 8:00-8:30

Session 9: Road Map for Successful Planning | 8:30-9:30 | Gary Vicinus, Andy Weissman

The States have tremendous leeway in designing an implementation program based on the final CPP rules.  The states can choose among Command and Control Strategies, rate based strategies or mass based strategies and can allow for trading within the state, across states or even choose to adopt a national program that will be designed for trading allowances under a cap and trade program.  

The implications for utilities are that there is a great deal at stake depending upon whether the rules are favorable to the utility or not.  Utilities within a state will not be aligned in many cases and states are likely to look for consensus among stakeholders and simplicity in developing its rules.

For this reason, utilities need to be prepared for the statewide process.  This means that they must have perspective not only on what is best for their own utility, but the likely positions of other utilities in the state, what is best for the state, and whether interstate trading is likely.  Finally some view of the national emission trading market must be considered.  There are lots of options and positions.

In this environment, a utility must develop a negotiating strategy that will mitigate its risk and position itself for a successful outcome at the state level.  The speakers will both address potential reconsideration or litigation routes and a blueprint for preparing for a successful statewide negotiation strategy. This blueprint will address:
•    Who might focus on reconsideration or litigation and the arguments for and against this approach?
•    What preparation is needed for a successful statewide strategy?
•    Whether to consider by-passing the state plan and join a regional or national trading regime?

Drivers and Cost and Price Impacts

Session 10: Analysis of CPP Outcomes | 9:30-10:30 | Pat Augustine, Melissa Haugh

The ultimate implementation of the CPP across the states is highly uncertain, meaning that the potential impacts on the power sector range widely.  This session will present likely power market trends at a high level and examine how different CPP compliance mechanisms can impact power market outcomes in different ways.  

The discussion will include:
•    An overview of likely national trends in the power sector under the CPP versus “Business as Usual” conditions;
•    Impacts of the CPP on natural gas demand and future natural gas prices;
•    An examination of the range of potential carbon prices that could result from a national cap-and-trade structure, regional cap-and-trade programs, and single-state cap-and-trade systems; and
•    The potential impact of different compliance mechanisms (command and control vs. market-based) on power prices and potential asset performance and valuation.

Networking Break    10:30-10:45

Business Strategy in a Transformed Market

Session 11: Factoring Clean Power Plan into Business Strategy | 10:45-11:45 | Gary Vicinus, Andy Weissman

The Clean Power Plan is but one important element of a future business strategy for utilities, developers and energy providers.  It cannot be considered in a vacuum but rather must be put into the proper perspective as part of a transition to the firm’s best position for the future.  The speakers will provide for an interactive discussion among participants in how stakeholders can best plan for the future and turn the CPP regulations into a transforming business plan for a successful future.

Recap Forum, Q&A | 11:45-12:30