Last week, the Brattle Group released a report challenging the assertions made by the North American Electric Reliability Corp. last fall on the impacts of U.S. EPA's Clean Power Plan on reliability. During today's OnPoint, from the National Association of Regulatory Utility Commissioners winter meeting, Jurgen Weiss, senior researcher at the Brattle Group, discusses the report, which was presented to regulators at the conference. He explains how states can use available tools to help ensure reliability as they structure their power plan compliance mechanisms.
Monica Trauzzi: Hello, and welcome to OnPoint from the NARUC winter meetings. I'm Monica Trauzzi. With me today is Jurgen Weiss, senior researcher at the Brattle Group. Jurgen, thank you for joining me.
Jurgen Weiss: Sure. Thanks for having me.
Monica Trauzzi: Jurgen, you are here at NARUC presenting a new report on the impacts of the Clean Power Plan, in particular on reliability, and you're contending that the plan will not have significant impacts on grid reliability. How did you come to this conclusion? Talk about the report.
Jurgen Weiss: Sure. So to be very precise, NERC issues an initial reliability review in November, and we were asked to look at that review and carefully examine the assumption it makes and come to our own conclusions of to what extent we believe the Clean Power Plan may or may not relate to significant reliability concerns going forward. And so we looked at the assumptions that the EPA made and at NERC's criticism of those assumptions, and we looked at the conclusions that NERC drew, which were relatively modest conclusions, really. They conclude that they need to study a lot of this a lot more, and we agree with that, but we also found that there are a number of things that NERC did not consider, a number of options that exist to deal with emerging reliability issues, and because of these options, we ultimately come to the conclusion that you can plan for complying with the Clean Power Plan without there being a high likelihood of causing reliability concerns.
Monica Trauzzi: The NERC report was widely circulated. What makes the Brattle Group uniquely qualified to provide an assessment like this to utility regulators?
Jurgen Weiss: So I'm not sure we're uniquely qualified, but I think we are qualified to some extent based on the work we do and have been doing for many years in analyzing power markets, not just in the United States, but internationally, in helping design some elements of those power markets, and understanding how those power markets interact with things like resource adequacy and reliability issues that exist or don't exist as a consequence of those markets.
Monica Trauzzi: So let's get into some of the details. What was incorrect about NERC's analysis?
Jurgen Weiss: So I think I would be careful to say incorrect. I do think that NERC legitimately raises questions about assumptions that are made. NERC is responsible for reliability in the system, so they, by definition, I think, have to be conservative. So it's less that they were necessarily incorrect about concerns that they raised, but I would rather say incomplete in the sense that they have raised questions about the emissions reductions that, for example, are feasible within each of the building blocks that EPA identified, and we agree that for each of these building blocks, the concerns are legitimate concerns, but we also think that for each of these concerns, there are a number of options that would produce more emissions reductions, for example, than the EPA may have assumed in its BSER definition.
Monica Trauzzi: So each state has a different story, it has a different target to meet, a different portfolio of resources. Are there certain states that you've determined could potentially face more of a reliability challenge as a result of the rule?
Jurgen Weiss: So I think that is a very good question and, in some sense, illustrates the complexity of making affirmative statements about the impact of the Clean Power Plan on reliability. It is true that as the Clean Power Plan currently stands, the EPA has determined state-level targets. I think it has to do that. And those state-level targets are different, and they represent different amounts of emissions reductions relative to today, right. So in that sense, different states viewed by themselves will have to react differently. But, of course, the Clean Power Plan contains many flexibility options that create options for states to work together, for example, in ways that, you know, lower the differences, make smaller the differences in emissions reductions that have to take place inside a given state. And so because we don't know how states ultimately choose to propose to comply, it's very difficult to know now to what extent one state having a very stringent target will create reliability issues in that state.
Monica Trauzzi: So a regional plan is really the way to go for many states.
Jurgen Weiss: So this is -- how states ultimately choose to comply was not part of this project, but we do point out repeatedly in the report that the flexibility that includes cooperation across state lines, and in some cases, not even cooperating across states that are adjacent to each other, clearly creates mechanisms that would help mitigate any reliability concerns that exist. And I -- so the Brattle Group, me included, worked earlier in 2014 on a proposal for regional compliance that clearly comes to that same conclusion.
Monica Trauzzi: How is this report being received at this week's winter meetings? What conversations have you been having with PUC commissioners, many of whom do believe that this plan could pose reliability challenges?
Jurgen Weiss: Yeah. So I think that, by and large, the reception has been positive in the sense that people recognize that NERC put out some concerns. Those concerns were not really based on a very in-depth and final, if you want, quantitative analysis of how this will play out, because you can't. And I think our report is in the same vein. We also have not based it on some kind of exhaustive quantitative modeling of the future since we don't know it, but we propose alternatives, and so people are appreciative of having alternatives out there that NERC can and perhaps should consider as it moves forward in its own analysis. The surprising thing that has come up in some ways is that there are concerns by some of the commissioners that have less to do with the theoretical ability to meet the Clean Power Plan goals without impacting reliability in the sense that people acknowledge, yeah, we may have the tools at our hands. What they seem to be a little more worried about is what states will ultimately do in their state implementation plans and whether they will make full use of those tools, whether they're, you know, operational tools or technology tools or the flexibility tools we talked about, like regional cooperation, or whether we'll pick a solution or strategy to comply that actually narrows their choices in ways that, then, could impact reliability.
Monica Trauzzi: All right, Jurgen, this is an interesting report to add to the discussions, the already-heated discussions on the Clean Power Plan. Thank you for joining me.
Jurgen Weiss: Sure. You're welcome. Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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