United States: Will The Lights Stay On? Timing And Reliability Become A Focus Of The US EPA's Clean Power Plan

Last Updated: April 1 2015
Article by James W. Rubin

EPA is reportedly hard at work, reviewing over 2 million public comments filed following publication last June of the Clean Power Plan, a bold regulatory move to reduce carbon emissions from existing power plants in the United States by seeking reductions in energy demand across the grid. Under the Clean Power Plan, states are to create plans to meet specified emission goals expressed as rates of carbon emissions per megawatt hour. While the goals must be met by 2030, EPA has proposed that states begin to meet interim targets through an averaging of emission rates from 2020 to 2029. EPA envisions this interim period as a way to plan for and phase in the 2030 targets—a "glide path" in EPA's vocabulary. Many states, utilities and other stakeholders, however, have described it as a "regulatory cliff," requiring massive changes in energy infrastructure and dispatch that could not be accomplished in so compressed a time period, especially with many actions needed to be front-loaded during that time frame. Moreover, many worry that such a rapid transformation could result in retirements of coal-fired plants and other dislocations which could harm the availability of reliable and affordable power, the jurisdictional province of state utility commissions and the Federal Energy Regulatory Commission (FERC).

FERC has now taken up these issues in a very public way. On February 19, 2015, the FERC Commissioners held the first of a series of four technical conferences to discuss implications of compliance approaches to the Clean Power Plan. The conferences focused on issues related to electric reliability, wholesale electric markets and operations, and energy infrastructure—all within FERC's jurisdiction.

The February 19 conference initiated the process at the national level, and FERC has since held western, eastern and central regional conferences. The national overview provided FERC Commissioners with the opportunity to make general observations and ask particular questions of leading industry groups, state utility commissioners and other experts about the role FERC should play in the development and implementation of the Clean Power Plan. At the regional conferences, FERC was able to focus more specifically on impacts to those region's markets, generators and grid operators, though the discussions mainly followed the themes presented at the national conference.

At the national conference, the FERC Commissioners made it clear they were acting mainly to convene a conversation and solicit perspectives on potential impacts on reliability, infrastructure adequacy and market operation and how these impacts may be mitigated. They would only play an advisory role with EPA since it was not their rule, but they also emphasized they would operate where necessary under their own jurisdiction to mitigate harmful impacts from the rule to reliability, costs, electricity prices and market operations.

The panel discussions mainly focused on three issues: 1) the general concern that EPA had not given states sufficient time to draft individual or regional plans or to meet interim (or even final) targets, and the need for additional time to do so; 2) the need for some kind of safety valve to ensure reliability was not compromised by the final rule or state plans; and 3) FERC's necessary role in educating EPA about impacts to the power sector; assisting states in implementing compliance plans, including through expedited authorizations and permitting of infrastructure development; and overseeing the functioning of power markets.

The timing of these conferences is notable since it comes after the close of public comments, when EPA is finalizing the rule. EPA has stated the rule will be out by mid-Summer 2015, which means it would submit it first to the White House review in the very late Spring, so there is a limited window for further work on these issues. EPA claims that issues of reliability and timing have already been fully brought to the EPA's attention through the public comment process. Moreover, EPA has told stakeholders it is still open to specific, concrete and workable ideas and solutions for these issues. Thus, EPA may be receptive to FERC's advice in areas of the latter agency's expertise and jurisdiction, particularly in protecting reliable and affordable power. It is not likely these conferences themselves will generate any significant new or novel solutions, but it is hoped they will supply FERC with perspectives it can then share with EPA to better shape the final rule.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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