Everyone Involved with Renewable Energy is Looking at FERC for Reforms

June 16, 2021
Achmad Ibrahim for Center for International Forestry Research/Flickr
Mike Jacobs
Senior Energy Analyst

Last month UCS posted a blog about the distortions in transmission planning with differing assumptions about the future used in different planning processes (or two sets of books, as we might say, if this were a business trying to avoid accountability for its taxes). Clearly, the folks in charge of the power system have some real firefighting on their hands. Now let’s look at the reforms, starting with the appointment of a new commissioner, that the Federal Energy Regulatory Commission (FERC) can adopt to better support grid planning.

For most of the last four years, FERC has endorsed efforts by regional grid operators to squelch the impact of state clean energy policies. We have written about this before: more recently, Utility Dive’s Catherine Morehouse described the present status of what the new FERC chairman Rich Glick calls “MOPR” reform (a price-increasing rule aimed at state policies related to energy transition).

There’s an urgent need to understand climate-change impacts on electric system reliability, as demonstrated by the terrible performance of the gas supply and gas-fired power plants in Texas in February. The widespread power outages—and high prices caused by shortages—impacted the health and wallets of many people who were unprepared for such burdens. But with action by FERC (and Texas government), these harms could have been avoided.

In search of reliability and deeper pools of energy supplies, we turn to transmission reforms that fall on the doorstep of FERC. The agenda for this month reflects the need for progress in transmission planning. Two planned dockets will explore how state leadership and state-level payments for grid improvements can be embraced and supported by FERC while FERC gathers its policies and needed votes to make policies that allocate costs to all the beneficiaries of transmission. FERC also recently held a conference to gather information on the utility industry’s ability to prepare for extreme weather. While we expect to see a string of inquiries and rulemakings from FERC, these may be delayed due to the lack of a new appointment by the Biden Administration.

The agenda for FERC’s open meeting this month also includes a new look into “Customer Matters, Reliability, Security and Market Operations.” All these new and unfinished matters at FERC revolve around the shared need and shared responsibility for reliability and consumer protection. That is, we don’t expect only some grid users to pay for reliability or for consumer protections. Climate change further raises the stakes for the federal authorities to stop hindering the states’ efforts and start helping with the energy transition. Yet we are now looking at an ongoing majority of FERC commissioners opposed to the clean energy transition or, perhaps worse, a shorthanded and deadlocked FERC lacking the deciding vote that the Biden Administration has the power to appoint.

Over the past few decades, transmission policies allowed by FERC and adopted by the transmission organizations and owners assumed the marketplace and economic values would sort out what transmission is needed. These assumptions are no longer valid. And the impacts of this are apparent all over: clogged interconnection queues for renewables that can’t connect to the grid, faltering reliability, and a lack of resilience all impact consumers and our clean energy aspirations. Major weaknesses in the negotiated approach to opening the electricity markets include transmission limits and transmission planning that seem reluctant to support new competition.

As things stand today, if a seller of renewable energy or a state government buying renewables tries to use the current regime in the RTOs, the amount of transmission that can be built and maintained to deliver that clean energy is doomed to be inadequate.

We can see that FERC chairman Glick is exploring grid reliability and extreme weather. We can also see that he has been forced to write dissenting opinions on decisions that allow FERC to subvert the state laws written to enhance the energy transition and reduce power plant emissions. The battle with states must come to an end. The policy changes on transmission must begin. It remains to be seen how well FERC, the lead agency on these matters, can move ahead without the appointment of new commissioners as the term ends for those previously appointed.

Posted in: Climate Change, Energy

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Mike Jacobs is leading the Union of Concerned Scientists’s work on electricity markets and regulatory reform. He develops proposals in an effort to shape federal, regional and state electricity markets, regulation and policies to encourage the expansion of renewable energy resources and the reduction of coal-fired generation.