A leading federal electricity regulator yesterday warned market participants of the "unforeseen consequences" of having U.S. EPA and state air regulators essentially take on a job they’ve never done before — plan what the nation’s electric grid will look like in the future.
Philip Moeller, who is stepping down from the Federal Energy Regulatory Commission when his terms expires at the end of the month, also said he is "very impressed" with new FERC Chairman Norman Bay, commending him for "trying to open up the process and include other commissioners in decisionmaking earlier."
Even Bay "would admit that he is relatively new to this industry" and therefore has a "bigger, steeper learning curve to tackle" as the agency moves ahead, Moeller said.
Moeller was delivering what amounted to a valedictory address at the PJM Interconnection’s Grid 20/20 conference on natural gas and electric operability issues at the grid operator’s headquarters in Valley Forge, Pa.
The outspoken Republican, who is wrapping up his second term at FERC, said he expects FERC to have a "more robust relationship" with state regulators as compliance with EPA’s proposed Clean Power Plan moves forward.
"Let’s face it, we have air regulators planning the electricity grid, like it or not. And there’s always going to be a lot of unforeseen consequences to that.
"We have a lot of state air regulators who certainly didn’t know what FERC was probably 12 months ago, and they will be in a major position to also be planning the electric grid, like it or not," Moeller said to an audience of electric generators and gas pipeline company executives.
"If you haven’t gotten to know them, you better do that pretty quickly because it’s in your interest and their interest for them to know you and for you to know them."
Moeller has "some faith" that EPA heard the commission’s and industry’s concerns about the carbon-slashing plan’s potential effects on reliable power delivery.
"But again, just like if I was designing an air regulatory program — with as much work as I try to put into it — I would make some mistakes along the way because that is not what I have done in my career. I have done energy.
"And similarly, you just have to expect that as air regulators, they’re not going to understand the nuances, the fundamental complexities of the grid and how it interacts," Moeller said.
He commended former FERC Chairwoman Cheryl LaFleur for convening a series of technical conferences on the Clean Power Plan earlier this year. "It was certainly something that initially EPA didn’t want us to do, because I guess they didn’t want the attention. Nevertheless, I think in retrospect even they would say those technical conferences were very beneficial. For goodness’ sakes, it gave them some cover for us to talk about these issues," he said.
His chief advice to EPA officials has been to not allow the final version of the Clean Power Plan, expected in August, to "disrupt" the operation of wholesale electricity markets.
"Wholesale competition has done an amazing job of cleaning up the air over the last 15 years. Just incredible, it’s taken for granted. And it shouldn’t be.
"The thing that they cannot do with the Clean Power Plan is disrupt interstate wholesale markets, or it very likely could lead to a more inefficient grid where generation can be shut in artificially and essentially emissions can go up," Moeller warned.
"The EPA needs to recognize that as they deal with the timeline in compliance plans that pipes and wires are challenging to build. And that has to be taken into account as part of their approval of state implementation plans. You can’t assume you can snap your fingers to get that built. It’s exceedingly hard to do so, and it’s getting harder."