A group of researchers is proposing a “social cost of blackouts” framework to balance reliability and energy affordability with emissions reduction goals in electricity planning.

The approach, from Isaac Orr and Mitch Rolling of Always On Energy Research, would give regulators a tool similar to the federal government’s “social cost of carbon.” That federal metric estimates long-term damages from each additional ton of carbon dioxide, recently valued at about $190 per ton, and is used nationwide when calculating the cost of projects and the value of federal tax credits.

The new framework would measure the immediate costs and human impacts of power outages when evaluating regulations and resource plans that could reduce reliable generation.

Orr, vice president of research at Always On Energy Research, said current policies lack an equivalent reliability measure. This leads to undervaluing blackout risks, which can cause billions in financial losses and deaths during extreme weather.

Orr’s modeling of federal regulations on coal and natural gas plants projected periods when demand would exceed supply in the Southwest Power Pool, which now includes Colorado. Those shortages could trigger rolling blackouts when generation cannot meet demand.

The estimated blackout costs in the Southwest Power Pool alone could wipe out the entire net benefits of the emissions reductions, he said.

Unlike the social cost of carbon, which focuses on theorized long-term climate damages, the social cost of blackouts addresses immediate, real-world harm to families, businesses and public safety.

Recent events show the stakes

In 2021, the winter storm Uri in Texas left millions without power for days amid frozen equipment and insufficient dispatchable generation, causing $80 billion to $195 billion in damage and hundreds of deaths.

Then in April of last year, a major blackout in Spain and Portugal hit tens of millions when renewables supplied a large share of electricity. With a sudden loss of generation triggered voltage oscillations and reduced grid inertia from fewer traditional power plants, the system could not recover.

For comparison, Xcel Energy’s 2025 Public Safety Power Shutoffs in Colorado — ordered to prevent wildfires, not because of generation shortages — caused outages estimated at $689 million in economic impacts, according to a Boulder Chamber report.

Colorado’s shift away from coal adds pressure. The state is pushing aggressive decarbonization while facing ongoing reliability problems at Xcel Energy’s Comanche coal plant complex, the state’s largest.

A spokesperson for the Gov. Jared Polis said reliability is already a core part of planning.

“The governor is supportive of new ideas to continue improving grid reliability and resilience,” said Eric Maruyama, a spokesperson for the governor’s office. “The greatest reliability challenges Colorado faces related to generation are due to the unreliability of the state’s largest coal power plant, in addition to localized fragility of the distribution system in some areas.”

Xcel Energy said it has flagged resource adequacy risks for years and is proposing short-term solutions to the Colorado Public Utilities Commission.

“We have identified resource adequacy as a growing risk for several years now and have previously proposed solutions to address this concern,” the company said in a statement. “Reliability and safety remain our top priorities.”

Xcel noted that it has not experienced outages due to a lack of generation under the definition used in Orr’s report.

Orr is recommending using a Lawrence Berkeley National Laboratory calculator to turn projected power shortfalls into dollar figures for planning. He said Colorado’s new role in the Southwest Power Pool makes the idea especially relevant here.