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EIA Publishes Regional Electricity Supply and Pricing Forecasts Using UPLAN Model

LCG, August 13, 2019--The U.S. Energy Information Administration (EIA) announced that it is revising the presentation and modeling of its forecasts for electricity supply and market hub pricing to better reflect current electricity markets and system operations in the U.S. Beginning with the August 2019 Short-Term Energy Outlook (STEO), the new forecasting approach models electricity markets using the UPLAN production cost optimization software developed by LCG Consulting. EIA uses the solution results provided by this proprietary model to develop the STEO forecasts of monthly electricity generation, fuel consumption, and wholesale prices.

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Dominion Energy Virginia Pursues 500 MW of Renewable Projects

LCG, August 8, 2019--Dominion Energy Virginia announced Monday that it is seeking bids for up to 500 MW of renewable capacity in both 2021 and 2022 to increase its clean energy resources. Dominion Energy stated that it is committed to having 3,000 MW of solar and wind in operation or under development in Virginia by 2022. This near-term step is part of an ultimate company commitment to reduce carbon emissions by 80 percent by 2050 across the 18 states it serves.

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Industry News

Regional Greenhouse Gas Initiative Gains Traction in Northeast

LCG, December 21, 2005--A Memorandum of Understanding (MOU) was signed yesterday by the governors of Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York and Vermont (Signatory States) that outlines a regional, cap-and-trade program to lower carbon dioxide (CO2) emissions from fossil fuel-fired electric generating units with the intent of reducing global warming. The launch date for the trading program is January 1, 2009. The MOU is a result of the Regional Greenhouse Gas Initiative (RGGI), which was initiated in 2003.

The regional annual CO2 emission budget will be equal to 121,253,550 short tons, with each Signatory State receiving a specific allocation. Similar to other emission allowance markets, like the SO2 allowance market, if a company does not have sufficient CO2 allowances to cover CO2 emissions from its generators, it must either reduce annual emissions or purchase allowances from sources able to keep their emissions below their prescribed cap. For the years 2009 through 2014, each state's CO2 budget will remain unchanged. For the years 2015 through 2018, an annual reduction of 2.5% will applied with the goal of achieving a 10% CO2 emission reduction in 2018. A safety valve price threshold of $10/ton (2005$) of CO2 emissions is included in the MOU.

The program includes allowance offsets to sponsors of approved CO2 emission offset projects, such as landfill gas capture and combustion, sulfur hexaflouride capture and recycling, converting non-forested to forested land, and projects to reduce fugitive methane emissions from natural gas transmission and distribution. For offset projects located in Signatory States, allowances will be awarded on the basis of one allowance for each CO2-equivalent ton. However, for offset projects located outside the Signatory States, allowances will be awarded on the basis of one allowance for every two CO2-equivalent tons. If the spot price of CO2 emissions equals or exceeds certain triggers, then offset allowances may be awarded outside of the United States.

The Signatory States plan to release in the next 90 days a "Model Rule" to act as the foundation of statutory and regulatory authority to establish the program. Public comment will be pursued, and revisions to the draft Model Rule will be considered. The Signatory States have committed to seek to develop the necessary state statutes and regulations such that the program can commence operations on January 1, 2009.

Massachusetts and Rhode Island had initially contributed to the development of RGGI but have elected not to sign the MOU. The MOU allows for these two states to opt back in prior to January 1, 2008 and encourages other states to join the program.

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