NERC: EPA should ease Clean Power Plan timeline to ensure reliability

A study released Tuesday by the North American Electric Reliability Corp. (NERC) concludes that more time is needed for utilities to develop new generation and transmission than is allowed by the timeline for carbon pollution reductions in the EPA's proposed Clean Power Plan (CPP).

The draft carbon regulations aim to cut carbon emissions 30% below 2005 levels by 2030, and require steep carbon cuts from many states by 2020. According to NERC, utilities take 4-5 years to build new generation plants and 6-15 years to construct new transmission lines to support them, meaning that both the interim 2020 compliance date and the final 2030 date should be revised. NERC did not give a recommendation on an alternative timeline.

NERC warns of reliability issues if the dates are not altered. The EPA has said reliability is a top priority and that the NERC report is premature in concluding the CPP threatens reliability because the regulations will not be finalized until this summer. EPA officials have hinted that the timeline will likely be revised.

While they believe changes in the Clean Power Plan's timeline will be crucial to ensure smooth compliance without reliability issues, NERC officials on a media call Tuesday cautioned that it would be premature to conclude from this report that the regulations could cause blackouts throughout the nation.

If utilities are allowed time to build out new gas and renewables capacity, plus the transmission to support it, states will be able to make the emissions cuts the Obama administration wants while ensuring reliability. It just may not be able to happen by 2030, and the 2020 interim date presents some severe problems, the NERC analysts said. Power companies and grid operators throughout the nation have also called into question the 2020 date.

2) Holding ongoing regional and multi-regional planning and analysis groups to evaluate reliability concerns, as FERC has done throughout the nation this year,

3) New, longer-term transitional plans from stakeholders to address potential reliability risks and infrastructure deployment requirements,

5) Incorporation of demonstrated reliability in all state and regional planning through established planning analyses and processes.

The EPA and some alternative energy groups called the report premature, pointing to the fact that the rule won't be finalized until the middle of the summer and questioning NERC's methodology.

The NERC report “overstates the reliability issues,” said Malcolm Woolf, Policy VP for renewables business advocacy group Advanced Energy Economy. NERC’s model “overlooks many of the operational tools that grid operators have developed, and are continuing to develop, to manage a grid.”

The analysis also “excludes some technologies like demand response and puts artificial constraints on the contributions other technologies, including renewable energy and energy efficiency, skewing the results.” Finally, it fails to recognize “states have the flexibility to spread their emission reductions over the 10-year compliance period,” he said.

Potential Reliability Impacts of EPA’s Proposed Clean Power Plan
http://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/Potential%20Reliability%20Impacts%20of%20EPA%E2%80%99s%20Proposed%20Clean%20Power%20Plan%20-%20Phase%20I.pdf
Phase I, April 2015

(Full Report at Link)

Executive Summary

The Environmental Protection Agency (EPA) issued its proposed Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units on June 2, 2014, commonly referred to as the proposed Clean Power Plan (CPP). The proposed rule is issued under Section 111(d) of the Clean Air Act and establishes limits on CO2 emissions for existing electric generation facilities. The proposed rule is currently anticipated to be finalized during summer 2015.

In its role as the Electric Reliability Organization in the United States, NERC has responsibility under Section 215 of the Federal Power Act to conduct periodic assessments of the reliability and adequacy of the nation’s bulk power system (BPS)—the high-voltage transmission and generation system (as opposed to local distribution facilities). NERC’s single focus is BPS reliability. NERC fulfills its responsibility in the public interest through conservative analyses and assessments that highlight reliability risks resulting from various possible future circumstances, given the severe consequences of an operationally unreliable or inadequate BPS for public health, safety and well-being, and our nation’s economy and security.

On August 14, 2014, NERC’s Board of Trustees directed NERC staff to develop a series of special reliability assessments to examine the potential risks to reliability that may arise from the implementation of the CPP rule and potentially accelerate the transformation of the resource mix in North America. NERC began development of this series of reports with its Initial Reliability Review, 4 published in November 2014, which examined the approach outlined in the proposed CPP and provided a high-level view of potential reliability risks.

NERC maintains a reliability-centered focus on the potential implications of environmental regulations and other shifts in policies that can impact the reliability of the BPS. Reliability assessments conducted while the EPA is finalizing the CPP can inform regulators, state officials, public utility commissioners, electric industry leaders, and other stakeholders of potential resource adequacy concerns, impacts to system characteristics (such as the straining of essential reliability services (ERSs)), and areas that may require transmission enhancements to ensure reliability.

This report is NERC’s Phase I special assessment. It provides an analysis of scenarios and identifies the potential risks to reliability resulting from the resource transformation called for in the proposed CPP. This assessment and its findings do not: (1) advocate a policy position in regard to the environmental objectives of the proposed CPP; (2) promote any specific compliance approach; (3) advocate any policy position for a utility, generation facility owner, or other organization to adopt as part of compliance, reliability, or planning responsibilities; (4) support the policy goals of any particular stakeholder or interests of any particular organization; (5) represent a final and conclusive reliability assessment; or (6) represent an actual system expansion plan.

NERC’s Phase I assessment consists of a three-part analysis: (1) a scenario and sensitivity analysis driven by gas prices and state or regional implementation approaches to identify resource adequacy and the range of potential timelines associated with reliability reinforcement needed to meet CPP requirements; (2) a transmission adequacy analysis to determine a comparable range of transmission needs along with lead times required to build that transmission (natural gas pipeline reinforcements are also examined); and (3) summaries of existing studies by NERC reliability authorities (such as Reliability Coordinators, Transmission Planners and Operators, and Regional Reliability Organizations) related to the potential impacts of the CPP rule, with a focus on the relevant reliability impacts. NERC leveraged key information from these studies to identify cumulative impacts on a region-wide or interconnection-wide basis. Throughout this special assessment, a stakeholder advisory group formed by the NERC Planning Committee provided advice, input, and vetting of the underlying assumptions and publicly available data.

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