FERC warned about infrastructure needs linked to EPA rule 

Source: Hannah Northey, E&E reporter • Posted: Friday, February 20, 2015

State regulators and industry groups warned the Federal Energy Regulatory Commission today that growing challenges in building new gas pipelines and power lines could put a pinch on states trying to comply with U.S. EPA’s climate rule.

Panelists at FERC’s first technical conference on the Clean Power Plan said environmentalists’ opposition to new infrastructure could complicate compliance with the Obama administration’s climate goals.

FERC Commissioner Philip Moeller, after hearing about difficulty in siting new power lines, called for federal coordination.

“Some agency of the federal government has to be empowered to bring the other ones together and highlight the importance that it is extremely difficult to site pipes and wires,” Moeller said. “Without those pipes and wires in place, I don’t know how this plan works.” Moeller said an administration agency like the Energy Department or EPA would likely fit the bill because it could compel participation.

Judi Greenwald, DOE’s director for climate, environment and energy efficiency in the Office of Energy Policy and Systems Analysis, told FERC commissioners that energy efficiency is expected to increase and avoid the need to build new power lines.

But Moeller reiterated concerns that states have raised about embracing energy efficiency into a plan that’s federally enforced. “A compliance plan eventually has to add up, and a state has to be comfortable with how it’s enforced,” he said.

Jim Hoecker, a former FERC chairman who is now general counsel of Wires, a nonprofit group of transmission owners, said EPA has said “virtually nothing about electric transmission in this rule” and called on FERC to work through its landmark Order 1000 — a rule that requires regional transmission planning — to identify the Clean Power Plan as a public policy priority.

Hoecker said that transmission cannot be a Band-Aid and that FERC needs to teach EPA about the difficulty of building new transmission lines. “This is absolutely critical that the commission be active as an educator and as a regulator, because this is happening all over your jurisdictional turf,” he said.

Michael McMahon of Boardwalk Pipeline Partners said building larger pipelines can take up to three years, and the process hinges on companies securing customers — and therefore capital — and maneuvering an increasingly crowded permit queue. McMahon acknowledged there is excess capacity in the nation’s pipeline system but said wiggle room isn’t always located near areas of consumption.

“Timing matters,” McMahon said.

Moeller also questioned DOE’s conclusion that only “modest” natural gas interstate pipeline additions would be needed to comply with a national carbon policy.

DOE commissioned Deloitte MarketPoint to analyze demands on the power sector and the nation’s gas pipeline complex under a “simple, illustrative” national carbon policy — not EPA’s proposal. The report found that a shift from coal to gas would require an infrastructure expansion that would be “modest, relative to historical capacity additions.”

Deloitte reached that conclusion after analyzing three scenarios using the North American Integrated Model: a reference case that assumed no carbon policy, an “intermediate demand case” that assumed a carbon policy would be applied to the power sector, and a “high demand” case that assumed a carbon policy would be applied to both the power sector and accelerated coal-fired generation retirements.

Susan Tierney, a senior adviser at the Analysis Group who peer-reviewed DOE’s report, said she agreed with the conclusion that gas infrastructure comes on much faster than other projects, including combined-cycle gas generation and other baseload generation or transmission.

Moeller said he didn’t want to “shoot the messenger” but told DOE’s Greenwald that the report was too optimistic (Greenwire, Feb. 10).

“The report was perceived as, whether you meant to or not, as rosy but … it’s not, and more a granular look at peak demand is what’s necessary,” Moeller said. “Some of my environmental friends are not thrilled by the thought of more pipelines in New England, but just about everybody else has recognized a need for that.

“What we’re really talking about is peak capacity, when it’s really needed, about 16 hours from now when it’s really, really cold,” Moeller added.