FERC Commissioners: Clean Power Plan Doesn't Spell Doom for Grid Reliability

All five members of the Federal Energy Regulatory Commission (FERC) agreed yesterday that acting on climate change is critical and none of them offered any indication that the U.S. EPA’s proposed Clean Power Plan to cut carbon emissions from existing power plants would hamper the reliability of America’s electric transmission grid.

A federal statute requires FERC to protect grid reliability and that was the subject of yesterday's hearing by the House Subcommitee on Energy and Power chaired by Republican Rep. Ed Whitfield of Kentucky.

It appears that reliability is a weapon of choice for opponents of the Environmental Protection Agency’s proposal, and some subcommittee members pushed the commissioners on the ability to ensure the dependability of the grid to deliver electricity to our homes and businesses in light of a changing portfolio of electric power sources and differing state compliance plans.

While it wouldn’t be correct to say that the FERC commissioners were equally enthusiastic about the EPA plan, none of them agreed with claims that the Clean Power Plan and grid reliability are incompatible.

In fact, Acting Chairman Cheryl LaFleur has consistently embraced working with EPA and others to ensure the grid stays dependable under the plan, and the rest of the commissioners were explicit that any reliability issues related to the plan would be manageable. For example, future Commissioner Norman Bay characterized such challenges as “manageable;” Commissioner Philip Moeller, a Republican appointee, described them as “not insurmountable;” and Commissioner John Norris called the plan “feasible” and “workable.” Of course, none of the commissioners sugarcoated the challenges that a changing electric resource portfolio presents; they just don’t agree with the opponents’ spin that carbon reductions can’t be accomplished without undermining reliability.  

A few highlights from yesterday’s hearing:

The changing resource portfolio: The commissioners were quick to recognize that EPA standards are not the only factor that is changing the face of the power sector. LaFleur emphasized that low natural gas prices, customer demand for clean energy, a variety of state policies, and other factors are causing our country’s power resource mix to change. The Commissioners did note that the proposal will speed the transition from coal power plants to gas and renewable power plants. As part of its reliability-focused mission, FERC has established a local and regional transmission grid planning framework that requires regions to look forward a decade and ensure the grid will be robust and able to handle potential demand. FERC also has encouraged development of forward-looking market mechanisms in several regions of the country that are intended to ensure the availability of sufficient power production capacity three years in the future. Potential grid impacts from the proposed Clean Power Plan, while new, will not land on ill-prepared grid operators. FERC has done a significant amount of advance work to provide assurance that reliability and fair costs will be maintained going forward.

Integrating state compliance plans into grid operations: While integrating state plans with the regional wholesale market will require care, LaFleur reminded everyone that this type of integration is not new. Organized regional markets have successfully integrated varied state and regional environmental requirements, including greenhouse gas reductions, into their existing framework for calling on power plants to meet demand. She further noted that this dispatch framework can take into account a variety of external factors, and that FERC’s role is to ensure that market rules can facilitate any changes required by the EPA proposal while maintaining fair costs.

EPA and state consultation: Some subcommittee members and Commissioner Tony Clark, the newest Republican appointee on the Commission, focused on what they described as a failure by the EPA to consult with FERC and the states. But EPA has indeed met with FERC and U.S. Department of Energy staff on several occasions to discuss the standards’ feasibility and likely reliability implications. EPA Administrator Gina McCarthy and/or her top aides have also participated in the last several meetings of state utility regulators and industry stakeholders. Continuing FERC interaction with EPA is important, and the good news is that with the Clean Power Plan only in the proposal stage and there remains ample opportunity for FERC to provide more input.

FERCs ongoing role: The commissioners noted that FERC’s role will become increasingly important once states begin formally proposing their implementation plans. Although some stakeholders have proposed that the standards contain a “reliability safety valve” to allow delayed compliance, the FERC commissioners didn’t seem to think a safety valve would be a terribly important or necessary component of the final rule. FERC can help states ensure that their proposed plans are designed to maintain grid reliability. FERC should start by encouraging the regional grid operators to proactively assist states in modeling potential compliance schemes.

As evidenced at yesterday’s hearing, instead of handwringing over made-up reliability scares by opponents of EPA’s Clean Power Plan, we can rely on FERC to do what it does in response to other external challenges – ensure the effectiveness of its existing rules to maintain reliability, adapt the rules when necessary, and move forward.