Recent Projects

California has legislation authorizing its Air Resources Board (ARB) to extend its cap-and-trade program for carbon emissions. This extension, while defining much of the program’s structure, asks ARB to develop some design features through a regulatory process and public feedback. California’s most recent changes to the plan are consistent with our previous comments on the program, and they place California on the path to internalizing the cost of climate change from carbon emissions. Our most recent set of comments encourage ARB to continue to set the price ceiling for carbon permits at least as high as the Social Cost of Carbon set by the Interagency Working Group in 2016, as it does in its Concept Paper on carbon pricing. We also encourage ARB to allocate preferentially any unsold carbon allowances to the price ceiling, rather than to a lower price.

California has long been a trendsetter in clean energy policy, and our input helped inform the state’s approach for evaluating distributed energy resources (DERs), such as rooftop solar installations. The state’s new approach, which will quantify the environmental benefits of DERs, could help influence other policies around the country, boosting the growth of clean energy sources. Our comments to the California Public Utilities Commission were heavily cited in a March 2018 administrative law judge ruling, which, if adopted by the Commission, would require utilities to conduct a societal cost test to determine the cost-effectiveness of DERs.

The Colorado Public Utilities Commission is revising their electricity resource planning process. Our comments to the Commission suggest legal language for incorporating externalities, like the climate effects of greenhouse gas emissions, into the state’s electricity policy. We also explain why the Social Cost of Carbon, as developed by the federal government in 2016, is the best tool for incorporating the externalities of carbon emissions into policy. Our response comments rebut the state electric utility’s faulty arguments against using the social cost of carbon in this process, and supports the use of cost-benefit analysis in determining the best policy option.

New York State plans to provide support to some existing small hydro, wind, and biomass generation facilities at risk of closure, in order to prevent the state from backsliding on its ambitious clean energy goals. The New York Public Service Commission released a report on the Clean Energy Standard Tier 2 Maintenance program, which focuses on the criteria a generator should meet in order to receive financial support and how these payments should be determined. Our comments on the report encourage the Commission to harmonize these payments across all proposed review processes for Tier 2 generators.

The New York Department of Public Service (DPS) is working on developing a more accurate compensation mechanism for distributed energy resources (DERs) that can capture the true value that DERs create. We have been particularly involved in the Value Stack Working Group, which is examining possible ways to price DERs based on specific value components of the resources, including environmental attributes. We were invited to make a presentation to the PSC on monetizing externalities of air pollution. In our presentation, we explained that the Commission can increase economic efficiency by directly incorporating the monetary value of avoided emissions as a value stack component into the DER compensation mechanism, and provided a methodology for this process. We plan to remain involved in this proceeding as it progresses in the coming months.

New York State is carefully considering rate design reforms that could be adopted by utilities to provide efficient incentives for adoption of distributed energy resources. Studies on customer bill impacts of such rate design changes are necessarily going to be an important factor in moving forward. Our comments on the scope of bill impact studies emphasize that the effect on consumer bills is just one of the aspects to be considered when looking at rate design changes. In addition, we suggest that DPS give more guidance on the types of rate designs it’s considering, parameters used to model consumer behavior, and the time horizon that the studies cover.

Nevada recently passed SB 65, a bill updating the state’s electricity planning process and boosting resources that provide economic and environmental benefits to the state. The Public Utilities Commission of Nevada subsequently held a series of formal and informal workshops and calls to shape the new regulation required under SB 65. We submitted joint comments with other stakeholders that included consensus language for several sections of the regulation. We also note in these comments that while stakeholders did come to an agreement on most issues, questions remain on how to define the social cost of carbon for the implementing regulation. Accordingly, we submitted supplemental comments to the PUC, discussing how the social cost of carbon is used by several other states, including in state electricity regulations and proceedings. We note that Colorado, Illinois, Maine, Minnesota, and New York use SCC estimates from the federal Interagency Working Group, and recommend that the Nevada PUC follow a similar approach.

Our comments to New York State Department of Public Service and New York Independent System Operator encourage the state to pursue carbon pricing, as it is the most economically efficient and technology-neutral way to internalize climate damages from greenhouse gases. We argue that the price used for carbon damages, the mechanisms to prevent emission leakage, and the allocation of revenue collected from emitting sources will all affect the level of emissions reductions the state can achieve through policy. The design of the program will determine its success in reducing emissions, and we encourage New York to consider carefully the benefits of different implementation plans.

Policy Integrity submitted two amicus briefs to the U.S. Court of Appeals for the Second Circuit on New York’s Clean Energy Standard and Zero Emissions Credits, defending the state’s policy.

The New York Independent Systems Operator (NYISO) and the New York Department of Public Service (DPS) recently began a joint effort to harmonize the state’s energy policies with the operation of wholesale markets, including by establishing a task force to discuss how to incorporate carbon pricing into the wholesale market. We recently submitted comments with a number of recommendations on how to ensure the task force’s work plan shapes the program in the most economically efficient and legally sound way. We suggested that price, revenue allocation, leakage, and harmonization with other state policies be included as topics in the work plan, among several others. We plan to continue to engage with this process over the next several months.