Testifying before the U.S. Federal Energy Regulatory Commission at a technical conference to discuss the Environmental Protection Agency's (EPA) proposed Clean Power Plan, Kathleen Barron, Exelon's senior vice president of federal regulatory affairs and wholesale market policy, said that well-designed carbon reduction rules can be a driving force to modernize the country's aging electric system, maximize the use of clean energy and support economic growth.
Barron said the EPA's Clean Power Plan does not require making a choice between greenhouse-gas regulation and affordable, reliable energy. Rather, she said the U.S. can rely on existing market structures to incentivize investment in clean energy sources.
Barron said she supports imposing a carbon fee on plant emissions wherin the EPA would determine a single, nationwide adder for carbon emissions. Under such a plan, carbon-emitting power generators in states that opt into the plan would include the carbon fee as a variable cost of operating, and the state would be deemed in compliance with the EPA's interim target.
The additional carbon value would reflect the true cost of operating high-emitting plants, Barron said, resulting in more clean energy sources being dispatched to the grid based on their lower true cost. High-emitting plants would still be called on when needed in order to meet demand, ensuring that reliability is not compromised, Barron said.
‘We estimate that states could eliminate at least 75 percent of the rule's impact on retail electric rates, limiting retail rate increases to 2 percent to 5 percent on a regional basis,’ Barron said. ‘This cost is within the range of routine customer rate increases, which averaged 3.2 percent among U.S. utilities last year.’
Others in the industry have supported imposing a carbon tax to reflect the costs of high-carbon-emitting generators.