On April 13, 2020, numerous industry groups and business associations (“Industry Stakeholders”) submitted a joint request asking FERC to organize a technical conference or workshop to discuss potential issues with the implementation of state, regional, and national carbon pricing in regions with organized wholesale electric energy markets. The Industry Stakeholders proposed that the workshop examine both the mechanics needed to account for the implementation of carbon pricing as well as the mechanics that are already in place. Industry Stakeholders stated that such a conference could open a dialogue among stakeholders and interested parties regarding the opportunities and potential difficulties presented by carbon pricing.

Carbon pricing is a market-based strategy wherein a price is placed onto carbon emissions in order to incentivize the reduction of such emissions. In their request, the Industry Stakeholders discuss how some FERC-jurisdictional wholesale electric energy and capacity markets are currently working on resolving potential gaps between market policies and state policies with regard to reducing carbon emissions. Therefore, the request states that “the time appears ripe” for FERC to host a technical conference to discuss such issues. As evidence of this, the Industry Stakeholders pointed to a number of actions already taken by wholesale market operators and related to carbon pricing, including a proposal put forth by the New York Independent System Operator (“NYISO”) on how to integrate carbon price into its wholesale electricity market, California Independent System Operator Corporation’s (“CAISO”) implementation of a carbon adder in the CAISO Electricity Imbalance Market, and tariff revisions by NYISO, ISO New England Inc., and PJM Interconnection, L.L.C. related to compliance with the Regional Greenhouse Gas Initiative, a market-based program to reduce greenhouse gas emissions in the Northeast.

The Industry Stakeholders’ proposed objectives for the technical conference include exchanging information on:

  1. the practices that markets are currently using to handle carbon pricing and how such practices could be improved upon;
  2. how carbon pricing could create regulatory certainty and incentives for investment into resources that support current state public policy goals; and
  3. the challenges faced by implementing carbon pricing in organized markets that operate in states with differing carbon reduction goals.

The request also included an agenda for FERC’s review that could be used as a template for the topics to be covered within the workshop.

A copy of the Industry Stakeholders’ request is available here.