Dive Brief:

• The Southwest Power Pool is the first regional transmission organization (RTO) to openly engage state air regulators on Clean Power Plan compliance, EnergyWire reports. 
• SPP held a webinar this week that brought together air regulators from the grid operator's 14-state territory to discuss how the region would tackle new requirements put in place by the U.S. EPA's Clean Power Plan. 
• SPP intends to revisit the cost estimates associated with compliance, and stressed to member states that a regional approach could be about 40% cheaper than a state attempting to go it alone.
• A state-by-state approach would require an estimated $3.3 billion annually in new generation capital investment and energy production costs, the grid operator estimated in a July report.

Dive Insight:

Now that the final Clean Power Plan has been released, states are beginning to formalize plans on how they will — if they will — comply with the mandate. While some states will go it alone, file lawsuits or refuse to develop a plan, officials at SPP are reminding members that working together is expected to significantly reduce the cost of cutting emissions.

SPP's webinar brought air regulators from the grid's 14 states together to discuss the carbon rules. According to EnergyWire, it's the first time a regional transmission operator has met openly with air regulators to discuss the plan.

"We respect the fact that some of the states will litigate; that's their right to do so," said Lanny Nickell, SPP's vice president of engineering. "We just hope and encourage them to be working a parallel path so that in whatever event occurs, that they're ready to implement something that will be reliable and cost-effective."

SPP's July assessment of compliance costs found more than 15 GW of generation beyond what has already been anticipated could be at risk for retirement without a regional approach. Similar evaluations from grid operators PJM and MISO have also found cost savings and less generation retirement associated with a regional approach.

In that analysis, released before the final rule was made official, SPP used a nominal $45/ton carbon-cost adder to incent dispatch of lower carbon-emitting generation resources. The study also incorporated 5.5 GW of wind resources and 4 GW of gas-fueled resources above currently planned capacity.

SPP officials say they will revisit their assumptions as states begin filing compliance plans, and will take a hard look at the potential impacts on the region's grid reliability. But they also cautioned it is difficult to know how long the process will take, as nothing like this has been attempted before. And it is complicated in the Southwest Power Pool, where the bulk of member states are also involved in other RTOs or deal with another grid coordinator.

"It's going to necessitate a higher degree of coordination to fully understand where those overlapping impacts might reside," Nickell said.