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With All Alarms Sounding, EPA Has Few Answers and Less Planning


November 15, 2023 - In the hours before the regulators at the Federal Energy Regulatory Commission (FERC) sat down with stakeholders from across the country to discuss the nation’s deteriorating grid reliability, the urgency of the gathering was underscored by a new and deeply unsettling winter reliability assessment.

The North American Electric Reliability Corporation (NERC) found in its most recent winter assessment that the electric grid is on the brink of another winter catastrophe.

“Much of North America is at an elevated risk of insufficient energy supplies this winter and is highly exposed to risks of energy emergencies,” NERC wrote in a statement that accompanied the report.

NERC warned that while summer months have traditionally presented the greatest challenges to the grid, winter and its freezing temperatures are proving equally daunting. The natural gas system is squarely in NERC’s sights as a grave vulnerability with freezing wellheads, distribution systems and pipelines a reoccurring problem that has starved power plants of fuel.

Rich Nolan, the National Mining Association’s president and CEO, said this “assessment once again shows that our grid reliability is in crisis. Each year, the challenges grow more acute with the accelerating loss of the nation’s essential coal generating capacity. Fuel security – once guaranteed – is now a key challenge threatening the supply of power for tens-of-millions of Americans.”

Nolan added, “there is unanimous concern from the states, grid operators, utilities, electric co-ops and the nation’s foremost reliability regulators that the pace of change driven by misguided policy is overtaking the reliability needs of the bulk power system. More than ever, we need an energy policy course correction before this deeply alarming situation becomes untenable.”

And that’s the essential question: what is being done to course correct?
FERC Presses EPA

At FERC’s reliability technical conference, Joseph Goffman, principal deputy assistant administrator for the Office of Air and Radiation at the U.S. Environmental Protection Agency (EPA), faced an hour of questions from the four FERC commissioners on the seriousness with which his office is considering reliability and the threat the so-called Clean Power Plan 2.0 poses to a system already pushed to the breaking point.

Goffman tried to downplay the impact of the proposed rule, pointing to claimed flexibilities in compliance, past experience in pressing technology mandates as well as his willingness to listen to concerns. But, as the commissioners reminded him, the past is not prologue and the bulk power system has never been stressed in the way it is now, nor has the proposed pace and scope of proposed change been so large.

Commissioner Mark Christie pressed Goffman on the number of coal and natural gas plants that could be forced to retire under the rule considering the immense challenges with installing carbon capture and hydrogen technology and infrastructure. Goffman could not provide a number.

Christie also asked how many natural gas and coal units will be able to get financing to install carbon reduction technologies. “If they can’t get financing, they’re going to shut down — it’s that simple,” Christie said. Goffman replied that the agency had not analyzed this.

Commissioner James Danly warned of disorderly retirements of essential capacity and the growing gulf between what capacity EPA believes will be available and what new capacity can come online before essential units are lost. FERC has “had reports from various RTOs, in fact, almost all of them, that they’ve had unexpected retirement rates that they didn’t anticipate,” Danly said.

Danly’s warning was reinforced by alarming testimony from Mike Bryson, the senior vice president of operations at PJM, the nation’s largest grid serving 65 million Americans. Bryson told the commission that months earlier PJM had warned it could face 40,000 MW of retirements by the end of 2030, leaving the market short of capacity nearly overnight. He said since issuing that report, PJM has already seen some announced retirements that it was not expecting, so the actual numbers of losses could be even bigger. He also pointed to recent announcements of cancelled offshore wind projects in New Jersey as deeply concerning examples of expected replacement generating capacity not being available when needed.

The message from PJM was strikingly clear: the system is in crisis and EPA does not have a handle on the situation.

Anthony Campbell, president and CEO of the East Kentucky Power Cooperative, who spoke on behalf of the National Rural Electric Cooperative Association, was even sharper in his concern and frustration with EPA’s agenda and the proposed Clean Power Plan 2.0. He said, “the only way that the proposed rule will not have detrimental effects on electric reliability is for EPA to withdraw it.”
Desperate Need for More Investigation

While not going so far as to tell EPA to withdraw the rule, Commissioner Danly did call for a far greater investigation of its reliability impact in a letter response to an inquiry from Senators John Barrasso of Wyoming and Shelly Moore Capito of West Virginia. He wrote that “it seems clear that the EPA did not study the reliability impacts of its proposal.” And he urged the senators “to continue to encourage the EPA to reopen its comment period, so that EPA can develop an adequate record on the reliability impacts of its Proposed Rule and allow public comment on the analysis.” He added that the EPA is already preparing an additional comment period on issues related to small business so it certainly can do so “for the critical issue of reliability as well.”

If EPA is at all serious about heeding the warnings and concern it heard from FERC and the power industry at-large, so prominently on display at FERC’s technical conference, it will do just that. EPA should reopen the comment period and then make substantive changes to its proposed rule that reflect the importance of the very generating capacity it is working so hard to close.

But don’t hold your breath. The concerns EPA heard last week aren’t new. Alarm over the nation’s collapsing grid reliability has been building for years, reaching a crescendo over the past few months. None of it has even so much as forced EPA to change the pace of its regulatory onslaught.

For all the well-founded concern over the Clean Power Plan 2.0, that proposed rule is just one piece – frankly the clean-up effort, the coup de grace – of EPA’s cumulative strategy to wipe out the coal fleet. Unless Congress, FERC and NERC work together to fully investigate the cumulative impact of EPA’s blitz of power sector rulemakings, we can’t begin to understand the full breadth of the threat to grid reliability or how to address it. As the latest winter reliability assessment reminded us, the danger of failing to act is all too real.