Report sees flaws in DOE plan to support coal, nuclear plants

Source: Rod Kuckro, E&E News Reporter • Posted: Friday, August 3, 2018

There are legitimate policy options that could increase the resilience of the nation’s electricity grid, but subsidizing coal and nuclear plants are not among them, says a new report by the Institute for Policy Integrity at New York University School of Law.

“To ensure that we make only efficient and cost-beneficial investments, decision-makers must adopt a clear and useable definition of resilience, identify potential actions that improve resilience, and conduct an economic analysis of the social value of those actions,” says the report, “Toward Resilience: Defining, Measuring and Monetizing Resilience in the Electricity System.”

“Only by engaging in this type of analysis can policymakers ensure that they do more than simply pick winners based on political preferences,” it reads.

The report, released yesterday, was spurred by the outpouring of comments regarding Energy Secretary Rick Perry’s proposal to direct financial support to coal and nuclear generating units that could not make money, said Avi Zevin, an attorney with the institute who wrote the report.

Perry’s plan was rejected unanimously by the Federal Energy Regulatory Commission in January when the regulator instead launched a broad inquiry into the resilience of regional transmission grids (Energywire, Jan. 9).

The recent emphasis on resilience “isn’t the first time [it] has come up in the context of the electricity system; it’s just gotten a bit of a different spin over the last year,” Zevin said.

The report emphasizes that because “most customer outages are the result of disruptions to the distribution system, substantial focus on resilience should be on states, who have the authority to regulate distribution system investments and policies.”

The federal role in enhancing resilience “is restricted but important,” the report says.

FERC “can use its authority over transmission investments, reliability standards, planning and coordination, and electric market rules to implement any identified cost-beneficial improvements to the bulk power system.”

DOE has a role, too, as it is “vested with authority to respond to grid emergencies in the unlikely circumstance that existing market rules and reliability standards prove insufficient to respond to a high-impact, low-probability event.”

But the focus by Perry and the Trump administration on “fuel secure” generation is misplaced, the report says.

“There are no well-established studies that, relying on realistic assumptions, show that increasing the availability of generators with ‘fuel security’ attributes will enhance the resilience of the electric system,” it says.

That does not mean that an examination of fuel security, its relationship to grid resilience and possible responses is not a worthy exercise, Zevin said.

“There are potential opportunities for additional federal or other action if a real serious, robust analysis shows that they’d be beneficial. But without having done the analysis, it’s hard to know,” Zevin said.

“My worry is that you end up doing something that looks at a narrow attribute of fuel security and you don’t look at how that interacts with other kinds of resilience concerns because there’s countervailing risks that you might create,” he said.

“To the extent that there is serious thinking to be done on enhancing grid resilience — it’s not an emergency — but that doesn’t mean people shouldn’t be thinking hard about the question,” Zevin said.

The institute’s report is the latest in a stream of reports supporting the views of parties on either side of the DOE plan (Energywire, July 20).