Largest U.S. Power Grid Says It Can Meet Obama’s Climate Mandate

  • Cost hikes from carbon cuts will be less than 3 percent
  • Plan aims to cut emissions 32 percent by 2030 from 2005 levels

The operator of the largest U.S. power market said it can meet the Obama administration’s sweeping goals to tackle climate change while limiting the impact on power prices to a less than 3 percent rise.

Power suppliers in the market, which covers parts of the U.S. mid-Atlantic and Midwest, can meet emission reduction targets for less than $2 a megawatt-hour, or 1 to 3 percent of average wholesale electricity costs, PJM Interconnection LLC, said in a report Thursday. Even with the added expense, the system will continue to attract new generators to satisfy the region’s growing power needs, the report found.

Suppliers across the U.S. are seeking ways to comply with President Barack Obama’s Clean Power Plan, which is designed to cut carbon dioxide emissions from generators 32 percent by 2030 from 2005 levels. The report challenged claims from opponents who say the environmental mandates will drive a wave of power plant retirements, risking blackouts and price spikes for consumers.

Under all of the plans that have been proposed to reach emissions targets, adequate power supplies “were maintained throughout the PJM footprint,” Muhsin Abdurrahman, a senior market strategist at PJM, said in a briefing Thursday.

Lower natural gas prices would drive the retirement of higher-polluting coal-fired power plants and reduce the cost of meeting the mandates, according to the report. A regional approach would also drive down expenses as opposed to individual states pursuing their own plans.

The study also found that the existing fleet of nuclear reactors can become economic as states look to maintain carbon-free generation to meet the targets. 

While the Supreme Court has suspended Obama’s Clean Power Plan pending a legal review, a number of states are still working toward reaching the goals it sets out.

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