The U.S. Environmental Protection Agency (EPA) is supposed to consider grid reliability in its rulemakings on the nation’s power plants. But, as a recent series of Congressional hearings on the deteriorating state of the nation’s grid reliability have made abundantly clear, not only is EPA not serious about grid reliability, it’s driving the crisis.
Last week, in front of the Senate Energy and Natural Resources Committee, the nation’s top reliability regulator, Jim Robb, the president and CEO of the North American Electric Reliability Corporation (NERC), testified that, “the pace of change is overtaking the reliability needs of the system.” He added, “We must manage the pace of the transformation in an orderly way, which is currently not happening.” Asked if the generating capacity EPA’s suite of regulations is forcing off the grid can be replaced with renewables and enabling infrastructure without incurring reliability impacts, he said, “Not in the timeframe we’re looking at. No.”
In the same hearing, Manu Asthana, President & CEO of PJM Interconnection, the operator of the nation’s largest grid serving 65 million Americans, said “we will need to slow down the retirement or restriction of existing generation until replacement capacity is deployed… frankly, we see this as the single largest risk in the energy transition.” He expanded on why we’re facing a crisis. “Markets have worked for 20 years… What’s different is the massive policy pressure.”
David Tudor, CEO and GM of Associated Electric Cooperative Inc., testified that, “The accelerated pace of retirements of on-demand, dispatchable coal generation – in particular – will put reliability in serious jeopardy.” He put a finer point on the challenge, saying, “We need more time. We need to get control of the EPA who doesn’t seem to care about reliability or cost.”
“There’s no way”
This week, the House’s Energy and Commerce Committee’s Environment, Manufacturing, and Critical Materials Subcommittee took on “the Clean Power Plan 2.0” and the threat it poses to grid reliability. The warnings were no less dire.
President and CEO of Buckeye Power, Inc. and Ohio Rural Electric Cooperatives, Patrick O’Loughlin, said, “I know that despite what EPA has claimed, this rule will in fact have a serious negative impact on the reliability of our electric system and will result in a dramatic increase in costs to Ohio’s electric cooperative members.” Asked if he could ballpark the costs of trying to comply with EPA’s proposed carbon rule, he said he could easily see a 50% increase in power prices for his customers in Ohio.
Todd Snitchler, President and CEO of the Electric Power Supply Association, said in his written testimony, “Our concern is that the proposed rule once again puts aspirational policy goals ahead of operational reality. If finalized, these proposed rules will likely lead to power plant retirements or reduced availability due to operational limits… at a time when experts (including the Federal Energy Regulatory Commission (FERC) and NERC) have warned that our nation is already facing a reliability crisis due to accelerated retirements of dispatchable resources.” He added, “some who dismiss concerns about the loss of both natural gas and coal generation cite advancements in both long duration battery storage and carbon capture and storage (CCS) to calm fears about reliability. It is important to note that – as of June 2023 – not a single commercial power plant in the United States uses CCS technology and there are no megawatts of long duration, multi-day battery storage interconnected to the bulk power system.”
Michael J. Nasi, Partner at Jackson Walker LLP, an expert on the Clean Air Act, testified that the proposed carbon rule will “devastate most of the 155 GWs of coal units not planning on retiring by 2032 by inserting immediate uncertainty about continued investments to keep plants open due to the infeasibility and cost associated with permitting, constructing and deploying CCS.” Asked if consumers can expect similar levels of grid reliability after the rule takes effect, he said, “there’s no way.”
Emerging Consensus on Reining in EPA
One expert after another has made clear the problem isn’t the addition of intermittent power, it’s the speed at which dispatchable generation is being lost and the gap opening between what’s needed for resource adequacy and what will soon be available. Across the board, grid operators, utilities and even the regulators themselves, want both NERC and FERC to have a far greater say in EPA’s rulemakings.
It may seem mind boggling that EPA is running reliability analysis on its rules without consulting the nation’s top reliability regulators but if there was any mystery about whether that had been happening, it’s long gone.
NERC’s Jim Robb testified that, “Interagency coordination is absolutely needed for policies that impact generation, especially coal resources, to keep reliability at the forefront of the policy table.” In other words, it’s not happening and needs to.
In that same vein, PJM’s Asthana added, “There is a critical need for integrating analysis of the reliability impact of specific state and federal policies prior to those policies being adopted. We remain concerned that compliance dates that impact the generation fleet are being chosen without such a rigorous analysis always being undertaken.”
To his credit, Senate Energy and Natural Resources Chairman, Joe Manchin, said, “I’m confident we can develop bipartisan proposals to better equip NERC and FERC and the electric industry with tools to address the reliability threats they face.” He signaled work on bills to do that is already underway.
Senator John Barrasso’s Spur Permitting of Underdeveloped Resources (SPUR) Act includes a provision that would mandate NERC and FERC review of EPA’s rules and the threat they may pose to reliability, codifying interagency review of rulemakings before they are proposed, not after the fact.
Next week, the FERC will be testifying in front of the House’s Energy, Climate, & Grid Security Subcommittee. Just a few weeks prior, the commissioners expressed their own alarm at the unfolding reliability crisis and the accelerating pace of dispatchable capacity retirements when testifying in front of the Senate. Their alarm came before the introduction of EPA’s unworkable and unlawful proposed carbon rule. What the Commission has to say next week – and the role they see for themselves in addressing the reliability crisis and EPA’s role in it – is worth watching. The nation is at a reliability inflection point and Congress now appears to be finally zeroing on the threat.
- On June 7, 2023