Delay needed for states to comply with Clean Power Plan — NERC 

Source: Hannah Northey, E&E reporter • Posted: Wednesday, April 22, 2015

The grid’s federally appointed monitor said today that parts of the industry need more time to comply with U.S. EPA’s Clean Power Plan, but its latest analysis was unable to quantify how much delay is required.

The North American Electric Reliability Corp., the federally designated grid reliability overseer, in an assessment of EPA’s landmark proposal to reduce greenhouse gas emissions from power plants said the agency needs to make changes to its final rule to coordinate and adjust to an accelerated shift to natural gas and renewables and account for long lead times needed to build new generation, pipes and wires.

“We’re at a point where we’re looking out approximately four years until implementation, 2020, and we really don’t have insights quite yet around conclusive reliability results around ‘Can we maintain reliability?'” John Moura, NERC’s director of Reliability Assessments, told reporters on a call today.

Moura said NERC did not find that the Clean Power Plan would trigger blackouts but noted the report reflects a growing need for new infrastructure, given a raft of expected plant retirements. He said he’s hopeful EPA will include state relief or extensions for those regions facing tight construction and permitting timelines.

NERC found in its reference case that about 33.5 gigawatts of generation capacity — coal, oil, gas and nuclear — is slated to retire through 2020, and an additional 7 GW will close through 2025. Although up to 22 GW of coal-fired generation will continue to operate through 2030, many of those units are considered “at risk” of retirement because of infrequent use, according to NERC.

Those retirements are expected to fuel the need for new infrastructure. Specifically, NERC foresees the need for about 7,000 miles of high-voltage transmission lines. New power lines can take up to 16 years to build, NERC said, and constructing a new combined-cycle gas turbine facility can average 64 months — or just over five years, according to NERC. Building a utility-scale solar power project takes an average of 36 months, while wind projects take 39 months, according to NERC.

“If EPA wants certain reductions by a certain time, they need to kind of understand how long it takes to get to those reductions,” Moura said.

Many states, like California and members of the Regional Greenhouse Gas Initiative in the Northeast, don’t require more time to comply with the EPA rule — slated to be finalized in the summer of 2015 — while other states need more time to build new infrastructure as the rule is accelerating a national shift from coal-fired generation to gas and renewables, Moura said. The timing requirements won’t be well understood until states begin crafting and submitting their compliance plans, he added.

Much of what’s driving NERC’s concern is the Clean Power Plant’s requirement for states to curb a bulk of their emissions by 2020.

“While we’re not prescribing a specific timeline or specific date for compliance, we do say that 2020 interim goal to require that as a first set of targeted reduction is too soon for many to complete the necessary infrastructure projects that are needed to achieve those reductions,” Moura said.

NERC officials said they have repeatedly met with EPA officials about their concerns.

EPA today defended the rule and criticized NERC’s report. Liz Purchia, a spokeswoman for the agency, said the rule when finalized will provide states and utilities with time and flexibility to invest in the system.

“We appreciate NERC’s efforts to report on possible impacts of the proposed Clean Power Plan. However, the report is premature because EPA has yet to issue a final rule, and states are still in the early stages of planning for and developing implementation plans,” she said. “The Clean Power Plan has benefited from several years of extensive outreach and engagement with the public, industry, environmental groups, other federal agencies, and state and regional energy reliability officials.”

EPA has signaled it may change the final rule to account for some of the concerns expressed today. EPA Administrator Gina McCarthy in February suggested EPA may change the way early reductions are mandated in its final version of the rule.

NERC also defended its choice of contractors to conduct the analysis. The Energy and Policy Institute criticized NERC in March for hiring energy consultant company Energy Ventures Analysis, a firm that publicly criticized the EPA rule. NERC officials today said they hired a total of three contractors, and assumptions that fed into the report were fully vetted (Greenwire, Dec. 17, 2014).

But a host of groups took issue with the NERC report.

Malcolm Woolf, senior vice president for policy and government affairs for Advanced Energy Economy, said NERC’s assessment overstates the reliability issues tied to the rule, and many of the issues identified are already being addressed.

“The NERC assessment tells us very little about how to move forward other than to slow down,” Woolf said. “We need NERC to be engaged on the subject of reliability, but in this assessment of the Clean Power Plan, it has made some of the same mistakes that marred its initial reliability review.”

Marc Spitzer, a former FERC commissioner and now a partner at Steptoe & Johnson, called NERC a credible and valuable voice and said it appears to be siding with the more conservative elements of the industry. Spitzer said the need for infrastructure is great, but building new projects in the United States is difficult and likely to become more challenging, given “not in my backyard” attitudes.

“If you take a step back, they’re not really saying, ‘We can’t do it’; they’re just saying, ‘We need more time,'” Spitzer said.