Analysts urge FERC role in ensuring states comply with Clean Power Plan 

Source: Hannah Northey and Jean Chemnick, E&E reporters • Posted: Tuesday, April 21, 2015

Consultants and analysts who believe the electric industry is well-equipped to comply with U.S. EPA’s Clean Power Plan want the Federal Energy Regulatory Commission to take on a larger role in ensuring states tackle problems in a timely manner.

Sue Tierney, a senior adviser for the Analysis Group, a Boston, Mass.-based consulting firm; Brian Parsons, director of the Western Grid Group; and Eric Svenson, a senior adviser with MJ Bradley & Associates, askedFERC Chairman Norman Bay to release an order requiring grid operators and reliability authorities to provide the commission with assessments — using common assumptions and formulas — of their states’ draft plans for complying with the EPA rule.

Doing so would give states time to tackle reliability problems should they arise, and issuing such an order is “within the clear bounds of FERC’s jurisdiction,” they explained in a report attached to the letter.

Each state could build into its plans methods or “next best” proposals for tackling reliability problems, such as building a new generating unit or adding an interconnection. FERC could then provide guidance for states on an ongoing basis, adding value to reviews that the North American Electric Reliability Corp. already conducts, according to the group.

“This will also allow states to address more minor reliability concerns identified in previous assessments without needing to stop compliance activities; only in the most severe — and, in our view, unlikely — case should a reliability assessment of this type result in a request to EPA to temporarily relieve compliance obligations,” they wrote.

FERC has for months been mulling whether to craft a proposal for how EPA could structure a “safety valve” mechanism to ensure that the marquee climate rule doesn’t interfere with electric reliability.

Tierney and the Analysis Group have argued consistently that it’s not necessary to add such a mechanism into the final rule EPA is crafting for a summer release, because the proposal offers enough flexibility to allow states to avoid reliability problems if they plan carefully. Tierney praised FERC’s “proactive efforts” to assess the implications of the EPA rule for the grid and argued that the power sector has accommodated changes in dispatch before without facing reliability problems.

“We are confident that we can achieve a lower-emissions electricity grid while maintaining reliability,” Tierney, Svenson and Parsons wrote. “Our electric system is designed to maintain reliable, dependable service through both typical, steady-state conditions and uncommon, unanticipated events.”

But the industry, grid operators and some FERC commissioners have signaled support for a safety valve.

The Edison Electric Institute, for example, wants FERC to develop — in coordination with EPA — both reliability assessments before states submit their plans to EPA and a safety valve (EnergyWire, April 8).

FERC Commissioner Philip Moeller in March said the commission should provide EPA with a detailed proposal that ensures FERC a formal role in making decisions (Greenwire, March 20).

More granular effects of the EPA rule on the electric grid will be clarified tomorrow when NERC releases its final study on the Clean Power Plan. NERC in a press release today announced it had completed an assessment of the potential risks to reliability resulting from the rule, focusing on generation and transmission adequacy.

NERC President and CEO Gerry Cauley said during an interview earlier this month that the report could offer details on how to design a mechanism to prevent electricity generating capacity from being jeopardized when states move to comply with the EPA rule (EnergyWire, April 6). Cauley said the report has a section “that deals with how the reliability assurance mechanism could work from a practical viewpoint.”

But Tierney during an interview today noted that NERC does not provide assessments as a way to solve problems and that the study will likely include “red flags,” but quickly added that the marketplace will respond to those signals to protect reliability.

Tierney also told a House Energy and Commerce Committee subpanel last week that the changes wrought by the Clean Power Plan would not be more disruptive to supply than those that followed other market and regulatory shifts. She noted that the grid has already changed to accommodate more natural gas-fired generation and less coal.

“Given the significant shifts already underway in the electrical system, the industry is already needing to adjust its operational and planning practices to accommodate changes even if EPA had not proposed this regulation,” she said.