The escalating debate over the costs and reliability impacts of U.S. EPA's proposed Clean Power Plan has created a classic "chicken and egg" dilemma for the electric power sector and its regulators, participants in a grid conference said yesterday.
Opponents of the EPA plan, centered in nearly a score of state governments, insist that it cannot go forward until the Obama administration can show that the grid's reliable operation will not be jeopardized by EPA's climate plan, which will force many coal-fired power plants to shut down, replaced by gas generation, renewable power and energy savings strategies.
But the reliability impacts of the EPA plan cannot be finally assessed until each of the states, separately or in regional groups, has determined how to implement EPA's carbon reductions, said Asim Haque, vice chairman of the Ohio Public Utilities Commission, speaking to the National Summit on Smart Grid and Climate Change in Washington, D.C.
The North American Electric Reliability Corp., the federally designated reliability monitor for the interstate grid, is in a "very, very difficult position," Haque said, "It is sort of a chicken-or-egg situation. NERC can identify issues, but at the same time [it] can't do technical analysis until it sees state implementation plans."
EPA is scheduled to issue its final plan next summer and that will trigger lawsuits from attorneys general in states whose governors oppose the plan. Other states support the plan and are moving to comply. Meanwhile, the initial compliance date, now set at 2020, will draw closer.
"The proposed timeline does not provide enough time to develop sufficient resources to ensure continued reliable operation of the grid by 2020. To attempt to do so would increase the use of controlled load shedding and potential for wide-scale, uncontrolled outages," NERC warned last month in its initial assessment of EPA's Section 111(d) plan (EnergyWire, Nov. 5).
"There's no smooth glide path here," said Edison Electric Institute Vice President of Environment Quin Shea, in one of the blizzard of comments about the plan submitted to EPA (ClimateWire, Dec. 2).
But another speaker at yesterday's conference said it was wrong to assume that utilities and transmission grid operators are going to wait for the political clock to run out before responding to an array of disruptive forces and compelling opportunities that are reshaping the grid now.
Behind NERC's warning are several assumptions, said Doug Scott, chairman of the Illinois Commerce Commission. "One is that nothing is going to happen. And that's not what I see practically going on on the ground."
Already in motion
The pressures of change on the grid today include the EPA air quality rule on mercury and other toxic emissions that is currently forcing some coal-fired plants into retirement; the abundance of cheap natural gas as competing power plant fuel; growing customer demand for distributed energy and microgrids; and continuing advances in smart grid technologies that are being activity developed and marketed by technology companies.
Regional grid operators are constantly evaluating the new transmission lines or natural gas infrastructure that their power networks will require as supply and demand expectations shift. Utilities are actively reassessing their needs for expanded, more resilient networks to stand up to major storms. In this picture, the grid sector's response will evolve between now and 2020 even as political and court battles play out.
"We are cautiously optimistic we can find a compliance path that's going to work, even though we may have issues with individual building blocks," Scott said, speaking to reporters during yesterday's conference.
"I'm guessing, as broadly as this is written, as much flexibility is written into this, and the ability to do some multi-state things ... I'm guessing most states can figure out a way to make this work," Scott said of the EPA plan.
Phil Sharp, president of Resources for the Future, a think tank whose research supports the need for a climate change response, said there is action on the state level already. It might be appealing to some to wait until all the evidence is nailed down and then enact a 50 year master plan for confronting the challenge, but such an expectation is "baloney," he said. "There is no evidence that humanity can operate that way.
"There is real risk out there. We are seeing the evidence of it, and we'd better start operating" on the risk. "It's more a question of how we manage the risk," Sharp said in an exchange with Dan Delurey, executive director of the Association for Demand Response and Smart Grid, the conference host.
Cheryl LaFleur, chairman of the Federal Energy Regulatory Commission, which oversees NERC's role as reliability monitor, said her agency would not formally address the reliability issue until after EPA has issued its final plan.
"FERC clearly has a role in ensuring that both energy markets and energy infrastructure support reliance with the plan," she told the conference. "We'll have a bit of a challenge assuring that markets work to call on resources correctly.
"We haven't worked out the specifics of how, the mechanics of how we will play that role."
But she said FERC's response was likely to follow the path it took in response to the EPA regulations on power plant emissions of mercury and other toxics, with a series of conferences "to tease out the issues so we would know where the issues were that had to be addressed."
Her FERC colleague, Commissioner Philip Moeller, has called for FERC to step directly into the reliability assessment issue now. In his comments on the EPA plan, he said it "seems to assume that a significant amount of new natural gas pipelines needed to fuel power plants, along with a similarly significant expansion of the nation's electric transmission system, will suddenly appear so as to meet the new demands under the CPP. Such an assumption ignores the very real challenges we currently have in expanding these categories of energy infrastructure."
Scott said that grid planners in states whose governors oppose the CPP, and those who support it, are meeting together routinely to work on regional reliability issues. Nobody has left the room yet, he added.
"At some point the environmental and the economic regulators are going to have to make a recommendation to their governors and their legislators about what's the best plan for our individual states," Scott said.
"There are lots of different ways that you can have regional compliance without having some Great Lakes state compact that requires an act of Congress and 20 years of negotiations. There are ways that small groups of states can actually get together. They don't need anything more than a memorandum of understanding," Scott said.
"The CPP kind of points in that way," he said.
Grid's other pressures
Just as regional transmission organizations are dealing day-to-day with changing reliability issues caused by the grid's upheaval, utility companies aren't standing still either, some company officials said at the conference yesterday.
Concerns about the grid's aging workforce and threats of cybersecurity attacks and extreme weather assaults are feeding investments in grid modernization and automation, and these are also opportunities to help strengthen reliability as the grid changes shape.
Michael Picker, commissioner with the California Public Utilities Commission, noted that when the state lost the energy from the San Onofre nuclear plant in 2013, utilities went outside the traditional script to meet the challenge. One utility has contracted with shopping centers to purchase power from the centers' privately owned battery facilities.
"And, we don't regulate it," Picker said of the utility's arrangement. "How do we begin to make sense of all this? How do we create the kind of system that can accommodate more and more of these distributed resources?"
Ohio Commissioner Haque said the grid's future reliability requires power companies to proactively address challenges. The average turnover of a state regulatory commission is three years, a tight timetable in which to develop and carry out a vision for the industry's future, he said.
"The reality is, unless you have this sort of industry leadership, and an understanding of where we are going, whether it be a national perspective or the state of Ohio's, these things do not get done, and that's the honest truth," Haque said.
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