35 Pace Envtl. L. Rev. 1 (2017)

handle is hein.journals/penv35 and id is 1 raw text is: 






ARTICLE


   Carbon Pricing in New York ISO Markets:
               Federal and State Issues

               JUSTIN GUNDLACH   & ROMANY   WEBB*

                   EXECUTIVE SUMMARY
    New   York's Clean Energy Standard  (CES), adopted  in Au-
gust 2016, aims to steer the state's electricity sector away from car-
bon-intensive generation sources. It supports low-carbon alterna-
tives by requiring retail electricity suppliers to purchase credits, the
proceeds from which are paid to renewable and nuclear generators.
Recognizing  that this will affect the operation of wholesale electric-
ity markets, New  York's electric transmission grid operator (the
New  York Independent  System  Operator or NYISO)  has com-
menced  a review to assess possible means of incorporating the cost
of carbon emissions into market prices.
     This Article explores two approaches  to carbon  pricing in
NYISO   markets: the first would involve NYISO adopting a carbon
price of its own initiative with a view to improving the operation of
wholesale  electricity markets (Approach 1), while the  second
would  involve adoption of a carbon price designed to reflect and
harmonize  state-level policies aimed at reducing electricity sector
emissions  (Approach 2). Under either approach, NYISO   would
adopt a per megawatt hour carbon price and use it to establish a fee
for each generating unit, consistent with its emissions profile. This
fee would be added  to the prices generators bid into the wholesale

*   Associate Research Scholars at Columbia Law School and Climate Law Fel-
     lows at the Sabin Center for Climate Change Law. The authors would like
     to thank Michael Gerrard, the Andrew Sabin Professor of Professional Prac-
     tice at Columbia Law School and Faculty Director of the Sabin Center for
     Climate Change Law, for his helpful advice and guidance in the drafting of
     this paper. We also thank Michael Burger, Executive Director of the Sabin
     Center for Climate Change Law, and Ari Peskoe, Senior Fellow in Electricity
     Law at the Harvard Law School Environmental Law Program Policy Initia-
     tive, for their insightful comments on an early draft of this paper.


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