The New England power grid operator, ISO New England, expects greenhouse gas emissions and wholesale energy prices to rise as a result of the Vermont Yankee nuclear plant’s closing in late 2014.
The energy market can spike or dip quickly, and a range of variables can affect energy prices and sources. But if the market remains relatively steady, ISO representatives project that Vermont Yankee’s closure would have a noticeable impact on the region.
ISO’s projected increases are tied to its method for organizing energy bids, called “bid stack.” ISO organizes bids from power generators across New England in bid stack from low to high, or cheap to expensive.
Lower energy bids sell first from the stack, and more expensive sources of power come online as they are needed. Removing Vermont Yankee from the stack means that the bids would shift down, and more expensive generators would fill the roughly 600-megawatt void left by Vermont Yankee.
Stephen Rourke, vice president of system planning for ISO, said this movement would inflate the price of power in the market above what it would have been with Vermont Yankee in the mix.
“Our marginal energy prices, all things being equal, are going to go up a bit,” he said.
Rourke also pointed out that the new generators coming on line would be more fossil-fuel intensive.
“We’ll end up with more fossil fuel running on the margin,” he said. “More often than not that is natural gas, or coal, or oil.”
Vermont utilities are often vertically integrated, with a utility owning many of its power sources, unlike the rest of New England where utilities usually purchase power solely from independent generators.
If the average price of power on the market rises, Rourke said, those other New England utilities and their ratepayers would feel it sooner. But, he says, Vermont ratepayers would eventually realize the financial effects of Vermont Yankee’s shutdown because they are not completely cut off from the New England power market.
“They might not feel it at first, but certainly through time they’d be affected by it,” he said.
Commissioner of the Vermont Public Service Department Chris Recchia doesn’t subscribe to this logic.
“I think it’s premature to say what will happen with greenhouse gas because we’re adding distributed generation in the form of solar and wind and hydro,” he said.
Vermont Yankee’s roughly 600 mW of capacity operating at a high rate of efficiency compares to the roughly 700 mW of intermittent wind capacity across New England.
Recchia said he has a tough time believing that the price of power will go up due to Vermont Yankee’s closure. He says better forecasting and accounting for small renewable energy resources can improve power prices. And he points to a 23 percent dip in 2012 wholesale energy prices, which was driven by plummeting natural gas prices.
Over the next three decades, however, the U.S. Energy Information Administration, expects natural gas prices to rise steadily — albeit slowly.
Rourke says Vermont Yankee’s closing should not affect the reliability of the grid. He says ISO is in the process of more precisely evaluating and projecting the effects of its shutdown on greenhouse gas emissions and energy prices. But, he says, the plant has a large presence in the region, and its shutdown will be felt.
“When you think of our average load during the course of the year, which is about 15,000 megawatts, and the lightest loads in spring and fall at 8,500 off-peak, 600 megawatts is a pretty big share of the off-peak loads,” he said. “Because they run 24 hours a day, you can think of it as a cumulative effect over many thousands of hours.”