FERC Charts Open, Unbiased Course to Enhance Energy System Resilience

The Federal Energy Regulatory Commission (FERC) demonstrated its political independence Jan. 8 in a ruling that makes improving the resilience of the U.S. power grid a national priority, but not in the way the Trump administration Dept. of Energy envisions. In keeping with an inclusive, market-driven approach to power market and industry regulation, FERC on Monday established a new, public consultative process through which it will resolve issues revolving around how best to enhance the resilience and reliability of U.S. power generation, transmission, and distribution infrastructure. The process is agnostic with regard to generation resources and technology.

Based on their ability to provide stable, “round the clock” electrical, or baseload, power, Energy Secretary Rick Perry recently directed the Dept. of Energy (DOE) to investigate and craft a new policy framework that would provide incentives to build out coal and nuclear energy generation capacity. In effect, subsidizing coal and nuclear power would come at the expense of zero or low-carbon emissions alternatives, such as wind, solar and natural gas, which have been growing rapidly over the course of the past decade.

By opening a new docket and proceeding, FERC is taking a much more broad-based, open and unbiased approach to resolving the challenges associated with power generation, transmission and distribution. That’s in keeping with its recent history of regulatory decision making, as well as general power and energy market and industry trends, representatives of nine energy industry associations said during a Web press conference on Tuesday, Jan. 9.

A regulatory agency’s rebuff to biased, pro coal and nuclear federal energy policy

FERC rebuffed the Trump DOE’s plan to subsidize coal and nuclear power by ending a proceeding begun with the DOE issuing a Notice of Proposed Rulemaking by deciding to take no action and then opening the new docket and policy making procedure. In it, FERC directs the Regional Transmission Organizations (RTOs) and Independent Systems Operators (ISOs) charged with ensuring reliable, resilient and affordable electricity throughout the U.S. to submit information regarding the issues and challenges surrounding efforts to enhance U.S. power grid resilience.

More specifically, FERC directed RTOs and ISOs to “examine holistically the resilience of the bulk power system.” Furthermore, the independent power and energy industry regulator specified that “the goal of this proceeding is:

  1. to develop a common understanding among the Commission, industry and others of what resilience of the bulk power system means and requires;
  2. to understand how each RTO and ISO assesses resilience in its geographic footprint; and
  3. to use this information to evaluate whether additional Commission action is appropriate at this time.”

Basic Structure of the Electric System

One of five FERC commissioners appointed by presidential order, FERC Commissioner Richard Glick cited the ability of distributed, “green” energy resources, more specifically microgrids, to enhance and the reliability and resilience of U.S. power and energy infrastructure.

Furthermore, he encouraged RTOs and ISOs to carefully consider “how different generation technologies – both traditional and newer, less widespread technologies – perform when faced with extreme weather, including droughts.”

Hosting a Web press conference at the offices of Washington, D.C. Law firm K&L Gates, representatives from nine power and energy industry associations commended FERC for taking a more open, unbiased and holistic approach to federal policy making and regulation than that proposed by the Trump administration.

AEE, ACORE, API, AWEA, ESA, EPSA, INGAA, NGSA, and SEIA jointly issued the following statement:

“We are very encouraged by the action taken by FERC today. We look forward to engaging with FERC, DOE, and grid operators in an examination of what resilience of the electric power system means and requires, and to demonstrating the contribution of our industries to ensuring reliable power for all.”

“We are joined with the other groups here to assure competitive, open markets for electricity and a level playing field,” Dena Wiggins, president and CEO of the Natural Gas Supply Association said during the Web conference. “We applaud [FERC] Chairman McIntyre and the other commissioners opening of a new docket that establishes a new, open dialogue regarding reliability and resilience.”

An open, holistic and equitable approach to enhancing U.S. energy and power resiliency

Wiggins pointed out that use of natural gas a power generation resource has grown rapidly over the past decade, to the point where it accounts for one-third of U.S. electrical power generation capacity. Growing use of natural gas, along with rapid growth in emissions-free, renewable energy resources, also is contributing to reducing the carbon and other greenhouse gas emissions driving climate warming, she added.

Wiggins also noted, as did other panel members, that FERC’s decision is in keeping with the holistic perspective the independent power and energy regulatory agency has taken historically. Particularly, since technological innovations, climate change, and environmental pollution have become increasingly pressing issues of local, nationwide and international concern.

FERC’s decision to close the Trump administration’s pro-coal and nuclear proposed rulemaking process and launching a new docket “is a sign that FERC continues to balance competing, and complementary, needs equitably. Any new regulations that may result should be more holistic and more effective,” the Energy Storage Association representative Jason Berwin said.

“Flexibility has been shown to be critical to power and energy reliability, resilience and affordability. The commission is asking ISOs and RTOs to explore and discuss mechanisms to address the risks revolving around resiliency, and we look forward to participating in that dialogue.”

Sources of Electricity Generation in the United States - 2016

Berwin also pointed out that the benefits from fast emerging renewable and distributed energy technologies are incompletely or not priced into U.S. power and energy markets at all.

ESA, along with the other eight panel members, said they are looking forward to the possibility that new regulations will provide the means for innovative power and energy industry participants to capitalize on their “green” energy and clean tech investments by creating mechanisms to value and compensate for services that are currently uncompensated, including interactions between bulk power generation and transmission/distribution systems and distributed energy resources.

In closing his remarks on FERC’s launching a new policy making procedure regarding the resilience of U.S. power and energy infrastructure, Commissioner Glick stated:

“There is no evidence in the record to suggest that temporarily delaying the retirement of uncompetitive coal and nuclear generators would meaningfully improve the resilience of the grid. Rather, the record demonstrates that, if a threat to grid resilience exists, the threat lies mostly with the transmission and distribution systems, where virtually all significant disruptions occur. It is, after all, those systems that have faced the most significant challenges during extreme weather events.”

*Image credits: 1) NOAA; 2) Union of Concerned Scientists: 3) US EIA

Andrew Burger
Andrew Burger
A product of the New York City public school system, Andrew Burger went on to study geology at the University of Colorado, Boulder, work in the wholesale money and capital markets for a major Japanese bank and earn an MBA in finance.

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