W E S T E R N E L E C T R I C I T Y C O O R D I N A T I N G C OU N C I L

Study Case Report

PC 10 High Carbon PricePC 11 Low Carbon Price

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Overview• Study Case Descriptions• Impacts to Generation Commitment and Dispatch• Impacts to Path Flows• Key Observations

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Carbon Price StudiesPurposeTo study the effect of applying varying levels of a Carbon Price adder while keeping all other assumptions at their original values.

These study cases were derived from the April 9, 2015 version (v1.5) of the 2024 Common Case. Comparisons are made to that version.

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PC10 Carbon Tax (CO2) Studies

• Rather than applying a high carbon tax (PC10) and a low carbon tax (PC11), a series of prices were applied.

• California Global Warming Solutions Act (AB32) was retained• System-wide carbon tax applied

CaseCarbon Tax ($/metric ton)

DescriptionWECC (non-California) California

PC1 0.00 27.51 Common case with AB32 in California

PC10-15 15.00 27.51 Assume that California would not lower their tax

PC10-27 27.51 27.51 Apply AB32 tax WECC-wide

PC10-40 40.00 40.00 WECC-wide $40 tax

PC10-50 50.00 50.00 WECC-wide $50 tax

PC10-60 60.00 60.00 WECC-wide $60 tax

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Generation Impacts

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Annual Generation - Carbon Price

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Data Metrics – Coal vs. GasData Element Coal Gas (CC) Gas (CT)

Fuel Price ($/MMBtu) 0.97 – 3.18 4.64 – 5.65 4.64 – 5.65

Heat Rate* (MMBtu/MWh) 9.14 – 12.62 5.02 – 11.67 6.10 – 13.70

CO2 Emission Rate (lbs/MMBtu) 200.0 – 205.2 117 117CO2 Emission Rate (lbs/MWh) 1800 - 2900 600 – 1100 800 - 1600Average Cost ($/MWh) 15 - 47 36 – 83 41 – 170

*Ranges show the largest concentration of values.

Under the assumed fuel prices and heat rates for the 2024 Common Case, coal-fired generation typically has a lower production cost than gas-fired generation. However, when a carbon tax is applied, the difference in the emission rates causes the coal-fired generation to be more heavily impacted.

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Example of CO2 tax – Coal vs. GasData Element Coal Gas (CC) Gas (CT)

Fuel Price ($/MMBtu) 2.00 5.00 5.00

Heat Rate (MMBtu/MWh) 11.00 7.00 9.00

CO2 Emission Rate (lbs/MMBtu) 200 117 117CO2 Emission Rate (lbs/MWh) 2200 819 1053Average Cost ($/MWh) 22 35 45 Example 100 MWh – tons CO2 110 41 53 $50/ton – cost /MWh 55.0 20.5 26.5 Adjusted cost ($/MWh) 77.0 55.5 71.5

In this hypothetical example the $50/ton carbon tax increased the cost of the coal-fired unit approximately twice as much as the gas-fired units.

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Comparison PC1 vs PC10-50 ($50 CO2 tax)

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Annual Generation Costs

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Annual CO2 emissions

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Trend in Average Capacity Factors

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Annual Energy Share by Fuel

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Change in Energy by State – PC1 vs. PC10d

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Path Flows

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Path 65+66 (COI plus PDCI)

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Path 46

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Path 26

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Path 8

The transmission associated with Path 8 was built to deliver the output of the Colstrip Power plant to the participants in Oregon and Washington. The $50 carbon tax mostly displaces that coal plant and even reverses the predominant flow. This could impact the operational limits of the path.

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Path 27

The transmission associated with Path 27 was built to deliver the output of the Intermountain Power plant to the participants in California. The $50 carbon tax significantly reduces the output from that coal plant.

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Observations

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Observation #1

• As the carbon price was increased:– More and more coal-fired generation was displaced

by gas-fired generation (CO2 emissions from burning coal are almost twice as much as from burning natural gas).

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Observation #2

• Compared to the PC1 common case, the results from the $50 carbon tax case showed a reduction in CO2 emissions of 54 Million Metric Tons (14.9%) with an increased cost of 14.8 Billion dollars (65%).

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Observation #3• The path flow results for the $50 carbon tax case

indicate that the carbon tax caused the imports into California to decrease.

• The imports were replaced with additional output from gas-fired generation inside California.

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Observation #4• The reduction in CO2 emissions in response to a carbon

tax had a cost of about 240 M$ per Million Metric Ton of reduction. The last increment suggests that a “saturated displacement” may occur at some point.

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Questions? And Contact Information:

Stan Holland(801) 883-6858stan@wecc.biz