FERC, EEI, DOE weigh in on EPA Clean Power Plan

A member of the Federal Energy Regulatory Commission, the deputy secretary with the Department of Energy and a vice president of the Edison Electric Institute on April 2 offered differing perspectives on challenges posed by a federal plan to slash power sector carbon emissions.

Deputy Secretary of Energy Elizabeth Sherwood-Randall told a forum organized by the Washington Post that she isn’t too concerned about the Environmental Protection Agency Clean Power Plan hobbling the domestic electricity system.

The EPA proposal to have states curb power sector carbon dioxide emissions 30 percent by 2030 has generated millions of public comments. A final version of the rule is expected out this summer but some legal challenges have already been filed.

Integrating intermittent renewable energy and non-carbon energy sources is an ongoing challenge, but “I don’t see it as entailing security and reliability concerns,” said Sherwood-Randall. Innovation will help the nation cope with the Clean Power Plan, she said.

DOE laboratories around the country are working on making the electric grid more flexible and resilient to threats, Sherwood-Randall said.

“First of all, we will be investing in the latest technology in how we use fossil fuels,” said the DOE official. Sherwood-Randall noted that DOE researchers are working on carbon capture and storage (CCS) research. She did not mention the recent cancellation of DOE’s FutureGen 2 CCS project in Illinois.

While the DOE official downplayed negative side effects of the CO2 proposal, FERC Commissioner Tony Clark and EEI Executive Vice President, Business Operations David Owens suggested the period of rapid changes in the grid could mean reliability challenges.

Timing is an issue, Clark said. The “interim goal” — that calls for much CO2 reduction to be realized by 2020 — is not seen as “interim” by utilities. It is viewed as a “cliff and not a glide path,” toward compliance, Clark said.

“Some entity has to look out at the grid as a whole” and ensure that the state implementation plans make sense when they are “stitched together,” Clark said. That would be an appropriate role for FERC, Clark suggested. He also noted that FERC has authority to enforce federal power laws, where EPA has authority to enforce the Clean Air Act.

The Clean Power Plan is accelerating the shift from coal power to electricity generated by natural gas. EEI’s Owens said that it is impossible to build new natural gas pipelines in two years.

“There needs to be a reliability safety valve,” Owens said.

“We are moving toward a grid that is very dependent on natural gas which has to be flowing through the pipeline at the moment that it’s needed,” Clark said. That’s probably an issue that needs more discussion, he added.

“I don’t think we have a huge problem” on natural gas pipeline financing in most areas, Clark said. The exception, however, might be de-regulated energy markets especially in the Northeast. This might be overcome by “tweaks” to contract agreements, Clark said.

Key questions concerning natural gas include whether cheap gas prices of recent times are the “new normal,” said Robert Johnston, CEO of the Eurasia Group, a global political risk research and consulting firm. Various issues from liquefied natural gas (LNG) to international markets will determine if “the supply revolution is sustainable,” Johnston said.

Political turmoil in the Middle East has led to some increased energy industry investment in North America, Johnson noted, adding, “10 years ago, Russia was expecting to export LNG to the United States.” Now the two nations are looking at competing on the international LNG export nation.

Until utility-scale storage is developed, then “the grid is essential,” Owens said. The United States is moving toward a “hybrid’ electric system, with a central system but more distributed generation, demand response and innovations like electric cars, Owens said.

There was seemingly unanimous agreement that development of utility-scale storage is vital to the future of the electricity sector. A big unknown is how quickly large-scale storage technology gets developed.

Insulating the grid from physical and cyber threats as well as prolonged outages from severe weather, were other topics that generated much discussion.

“We are doing a lot of exercising and training” together with industry to better cope with severe weather and other potential threats, said DOE’s Sherwood-Randall. She noted there will be a major grid exercise in the fall.

In response to a question, Sherwood-Randall said DOE is looking at investing in “mobile transformers” that could be used in power outages during severe weather disruptions.

EEI’s Owens also touted the cooperation that is occurring both within the various elements of the electric power system and with DOE on issues ranging from physical and cyber security to lining up backup parts and transformers during emergencies.

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Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 22 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants.

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