Economic and Financial Impacts of a National Retrofit of Closed-Cycle Cooling Systems for Fish Protection

This presentation describes the economic components of EPRI’s integrated assessment that estimates the costs and the economic, reliability, and environmental impacts of a regulation that requires converting existing electricity generating units that use once-through cooling to closed-cycle cooling.  Such a regulation would alter the technology and economics of existing facilities that currently use once-through cooling.  Some owners would decide to prematurely retire their units rather than retrofit, while others would retrofit and operate in the post-regulation marketplace.  The outcomes associated with these compliance and operational decisions ultimately register in the financial performance of the electricity industry; the industry’s environmental footprint; and the economic welfare of electricity industry employees, consumers, and shareholders. Results of the economic assessment including price impacts and unit closures are presented for five U.S. electricity markets:  Pennsylvania New Jersey Maryland Interconnection (PJM), Electric Reliability Council of Texas (ERCOT), Independent System Operator-New England (ISO-NE), Midwest Independent System Operator (Midwest ISO), and the New York Independent System Operator (NYISO).  These results arise from application of an economic simulation of these electricity markets.  The simulation model employs a mathematical representation of economic conditions and behavior.  In the model’s market simulation, owners of once-through facilities elect to install the new cooling systems if they expect the present value of the future stream of profits with closed-cycle cooling to exceed the costs of installing and operating the closed-cycle system.