Industry Criticizing… Industry? This is What Effective Advocacy Looks Like

, senior energy analyst, Climate & Energy Program | May 11, 2018, 4:21 pm EDT
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The only way to get what you want is to work for it. Nothing is easy. Hard work pays off if done well.

Old coal-burning power plants have the greatest emissions per energy delivered.

In UCS’s battles against the utility company PJM,  two “black swan events” provided reminders that can encourage activists everywhere. PJM is the regional grid operator, or “RTO,” for 13 states and the District of Columbia.

The Federal Energy Regulatory Commission, aka FERC, is the main arena for this advocacy and the unexpected breakthroughs. The context is how the low prices of renewable energy and natural gas are driving coal and nuclear plants over 40 years old out of business.

These plants boil water and use the steam to spin a turbine, which is a less efficient and slower-responding design than modern power plants.

My goal on comments and presentations to FERC is to increase the recognition and reliability value of renewable energy. Ever since the very cold weather of the 2014 polar vortex, the utility industry has been debating how to deal with the behavior of gas-burning power plants that did not contract for gas deliveries for power production in the coldest weather, and the simultaneous failure of coal plants due to weather conditions. These two sets of outages at fossil plants were not anticipated, and defied the assumption that fossil plant outages would not be correlated.

While the fossil industry scrambled and imposed spectacular higher costs on consumers from their lack of preparedness, the grid was better off than it would have been otherwise because of an underestimation of the reliability of wind generation and demand response.

The first unexpected moment (in advocacy, not the unexpected black eye for coal and gas units) came in late April on a panel discussing the reliability contributions of electric generation. I described a blind spot in planning for winter reliability, something I had previously discussed with PJM experts and put into writing for FERC. I said out loud that there was no assurance that that every fossil generator can deliver its expected capability in winter.

PJM reported coal and gas plants shut down in cold weather far beyond expected outages.

The conversation in the room stopped, and the session moderator asked that I repeat what I said.

On one side of me was Joe Bowring, the Independent Market Monitor, an expert economist who can be a very influential pessimist. He said, “that was unexpected.” He had been speaking previously about black swan events. Joe even mentioned he saw his child bitten by a black swan, which explains a lot about his obsession with unexpected and lasting unintended consequences. On my right was a PJM representative, who conceded that my point was true, though there was no doubt that the system was studied to confirm that the system was reliable.

We were debating the seasonal risks behind the PJM policy that requires any generator to be able to provide its full output in any hour in order to be counted for reliability payments in the capacity market. Going back to 2014, the lesson was “don’t assume that each generator has adequate gas pipeline capacity.” I had been saying for some time we have not confirmed each generator has adequate electric transmission capacity.

This time, they heard it.

While this was going on, the debate that started with gas generators out-competing coal and nuclear plants took a national stage with the US DOE promoting the idea that coal plants offer “resilience” and should be paid all their costs and profits, forever. FERC did not adopt this rule, but did ask the grid operators how to define resilience, what is done to ensure resilience, and what else needs to be done.

In response to the grid operators’ answers, UCS emphasized what most of the grid operators said in their comments about transmission, renewables, and sophisticated forecasting. PJM used this opportunity to push its agenda on a variety of payments related to flexibility and hidden costs that it had previously presented to FERC for approval. PJM’s response about resilience included a call for FERC to take PJM’s list and make all the grid operators evaluate and create similar rule changes.

Here’s where the second black swan came in. Five independent system operators other than PJM, all in the US, filed a response saying to FERC that PJM had gone too far and should not be granted this request. These grid operators laid it, plain and simple: “The Commission Should Not Impose on Other RTOs/ISOs the Actions and Deadlines Specified in PJM’s Response.” They said “Although not all RTOs/ISOs identified immediate or imminent resilience concerns in their regions, each identified specific potential improvements intended to enhance resilience within their respective region.”

This is the first time people can recall when one of the grid operators was singled out by the others for making inappropriate demands on the industry. The consumer and environmental advocates have been saying for years that PJM has trampled on the policies enacted by states and used too-narrow definitions of the public interest and energy resources valued by society.

While PJM is holding its annual meeting this month, I’ll remind myself and allies the only way to get what you want is to work for it. Nothing is easy. Hard work pays off if done well.

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