Electricity Markets and the Clean Power Plan

The challenge for the nation is to develop an efficient policy for reducing carbon emissions. The challenge for regional transmission organizations and their regulators is to make clear how environmental policies could mesh well with the necessary electricity market design. Environmental policies that put an explicit price on carbon would fit naturally with efficient markets. Absent an explicit price on carbon, RTOs should be alert to avoiding many variants of implementation mechanisms that lead to fundamentally undermining the operation of electricity markets.