The Experts Agree: The Reliability of the Nation’s Power Supply is in Crisis

Author: Rich Nolan
The Reliability of the Nation’s Power Supply is in Crisis

The U.S. Environmental Protection Agency (EPA) may continue to pretend there is no grid reliability crisis, but the debate is over. One alarming reliability assessment and warning have now been followed by three Congressional hearings in just the last month that have made it abundantly clear that dispatchable generation is being forced off the grid too quickly and EPA’s agenda is making an extraordinarily challenging moment all but unmanageable.

The nation’s reliability regulators, grid operators and utilities are telling a very different story than EPA about the state of the grid and the approach they believe needs to be taken to responsibly manage the energy transition.

During a hearing with the Senate Energy and Natural Resources Committee, Federal Energy Regulatory Commissioner Mark Christie said, “the United States is heading for a reliability crisis. I do not use the term ‘crisis’ for melodrama, but because it is an accurate description of what we are facing.” He added, “the core problem is this: dispatchable generating resources are retiring far too quickly and in quantities that threaten our ability to keep the lights on.”

Commissioner James Danly testified that, “we know that there is a looming resource adequacy crisis. Our market operators have been explicitly telling us as much for years.”

Even FERC Chairman Willie Phillips, hand-picked by President Biden, said, “I am extremely concerned about the pace of retirements we are seeing of generators which are needed for reliability on our system.”

Committee Chairman Joe Manchin asked all four FERC commissioners if they believed the nation could maintain grid reliability if coal is forced off the grid in the near future. All four responded with a resounding ‘no.’

Making an Alarming Situation Far Worse

In the days following that head-turning testimony, EPA rolled out its proposed carbon rule, a Clean Power Plan 2.0. The rule mandates the use of carbon capture and storage (CCS) by 2030 for any coal plant that wants to keep operating past 2039. In doing so, it effectively eliminates the coal fleet overnight by forcing plant owners to immediately make decisions about investing in a technology that, despite its importance to global emissions action, remains far from commercially demonstrated and economically viable. There is one coal plant in the world capturing carbon at the level EPA proposes and it’s not even in the U.S.

Additional mandates for use of CCS or hydrogen blending in baseload natural gas plants make EPA’s rule an unmitigated disaster for the reliable, affordable delivery of power.

In the wake of EPA’s rollout, the Senate Energy and Natural Resources committee held a hearing on the grid crisis that featured, among others, the nation’s top reliability regulator and the head of the nation’s largest grid operator.

Jim Robb, President and CEO of the North American Electric Reliability Corporation (NERC), testified that, “we must manage the pace of the transformation [of the grid] in an orderly way, which is currently not happening.” When asked if the generating capacity EPA’s power plant regulations are forcing into retirement can be replaced with renewables without incurring reliability impacts, he said, “Not in the timeframe we’re looking at. No.”

Just weeks prior, NERC had found in its 2023 Summer Reliability Assessment that fully two-thirds of the nation, an area that includes 160 million Americans, is at high-risk of blackouts should we see widespread and extended heat waves this summer.

Manu Asthana, President & CEO of PJM Interconnection, the nation’s largest grid serving 65 million Americans, told the committee, “We will need to slow down the retirement or restriction of existing generation until replacement capacity is deployed… frankly, we see this as the single largest risk in the energy transition.” PJM expects to be short of generating capacity by 2030 as electricity demand growth collides with policy-driven retirements that far exceed projected capacity additions.

David Tudor, CEO and GM of Associated Electric Cooperative Inc., testified that, “The accelerated pace of retirements of on-demand, dispatchable coal generation – in particular – will put reliability in serious jeopardy.” He added, “We need more time. We need to get control of the EPA who doesn’t seem to care about reliability or cost.”

These two Senate hearings left no doubt about the crisis at hand, but more alarming testimony was to come. On the House side, the Environment, Manufacturing, and Critical Materials Subcommittee took on “the Clean Power Plan 2.0” and the threat it poses to grid reliability.

President and CEO of Buckeye Power, Inc. and Ohio Rural Electric Cooperatives, Patrick O’Loughlin, said, “I know that despite what EPA has claimed, this rule will in fact have a serious negative impact on the reliability of our electric system and will result in a dramatic increase in costs to Ohio’s electric cooperative members.”

Todd Snitchler, President and CEO of the Electric Power Supply Association, said, “Our concern is that the proposed rule once again puts aspirational policy goals ahead of operational reality.”

And Michael Nasi, Partner at Jackson Walker LLP, an expert on the Clean Air Act, the viability of CCS, and electricity markets, was asked if consumers can expect similar levels of grid reliability after the rule takes effect. He said, “there’s no way.”

We are left to wonder who – if anyone – the EPA consulted on the state of the nation’s power supply and the threat the agency’s rulemakings pose to grid reliability. What we do know – without question – is that it wasn’t the nation’s reliability regulators, grid operators, co-ops or utilities.