Clean Power Plan not a danger to PJM states — report 

Source: Jean Chemnick, E&E reporter • Posted: Tuesday, March 17, 2015

The strategic consulting firm Analysis Group took aim again today at Clean Power Plan critics who charge the U.S. EPA rule will harm grid reliability.

In a new report focused on the area served by regional transmission organization PJM Interconnection, the Analysis Group argued that the existing power plant rule allows ample opportunity for states to construct rules that will safeguard power supplies while reducing carbon dioxide.

This is particularly the case, the Boston-based firm argued, if states opt to cooperate on regional approaches to rule compliance that would minimize changes to the way electricity is dispatched across the power system. PJM and Midcontinent Independent System Operator (MISO) have both come out in support of regional approaches as a means of complying with the EPA rule.

Today’s report argued that dire warnings about grid reliability are common whenever a major change in the industry is proposed but that issues would only come about if states, regulators and the industry go on autopilot and refuse to respond to problems before they arise.

“Given the significant shifts already underway in the electric system, the industry would need to adjust its operational and planning practices to accommodate changes even if EPA had not proposed the Clean Power Plan,” the report’s executive summary argued.

The report explored the idea — championed by PJM, Federal Energy Regulatory Commission Chairwoman Cheryl LaFleur and others — that EPA insert a reliability safety valve in its final version of the rule to be released this summer (EnergyWire, Nov. 10, 2014).

Such a mechanism would be unnecessary, the Analysis Group found, given the flexibility already present in the rule including the interim compliance period’s “glide path” — which averages emissions rates between 2020 and 2029.

But if EPA does add a new reliability provision to its rule, “we think EPA should design it in a way that creates appropriate incentives for reliance upon normal reliability tools and thus makes it unlikely that a waiver will need to be called upon.”

That means an excess of emissions released through the reliability safety valve should be offset somewhere else, the report suggested. And waivers should be granted only after a rigorous and transparent process to determine whether they are appropriate, it said.

Susan Tierney, one of the report’s authors and a former assistant secretary for policy at the Energy Department, said in an interview this afternoon that most of the reliability concerns raised have more to do with worries about cost “than about keeping the lights on.”

If states prioritize carbon mitigation and reliability, they can craft plans — especially in conjunction with their neighbors — that will not jeopardize power supply, she said. And while there are ways to protect low-income consumers from price spikes, the goal of reducing greenhouse gas emissions does warrant some investments.

“Carbon pollution has tremendous costs on the economy,” she said, pointing to her own city’s experience with record-breaking snow this year. “The Supreme Court has said that EPA had to do this.”

The agency has said that while its rule might lead rates to increase in some cases, investments in demand-side efficiency will mean that ratepayers see lower, rather than higher, bills overall.

The Analysis Group released a broader report last month that assessed reliability issues across the country, but today’s report was initially timed for last week’s FERC meeting.

PJM serves 13 states and the District of Columbia, including many of the participants in the Northeast’s Regional Greenhouse Gas Initiative.