PJM Interconnection, which coordinates the movement of electricity in 13 mid-Atlantic and Midwestern states plus Washington, D.C., on Dec. 17 released the full version of its extreme generation retirements and fuel security scenario study. Like the abridged version PJM released with much fanfare in November, the full Fuel Security Analysis: A PJM Resilience Initiative finds that PJM's power system can handle expected generation retirements, but problems could arise in five or so years under some extreme scenarios, including amid rapid and mass closures of coal-fired and nuclear plants combined with fuel supply issues and extreme weather events.

The report comes as the Trump administration, particularly the U.S. Department of Energy, has proposed and is said to be considering additional options for propping up financially ailing coal and nuclear generation in the name of resilience. Owners of the struggling nuclear and coal generation projects have pled for federal and state intervention, arguing that their projects can supply a degree of reliability that gas and renewables projects cannot. And the Federal Energy Regulatory Commission is reviewing the state of grid resilience after rejecting the DOE's proposal to ensure full cost recovery to generators that can store fuel on-site for 90 days.

The North American Electric Reliability Corp. is expected to release its broader accelerated generation retirement report Dec. 18. It remains unclear what, if anything, may come of the PJM and NERC studies or whether the Trump administration could use the documents to further its goals.

PJM President and CEO Andy Ott outlined in a Dec. 13 interview what led him to order the study, why the report may not have gone as far as some people may have wanted, and what steps PJM may take next. The transcript of that interview has been edited for length and clarity.

S&P Global Market Intelligence: The conversation both at PJM and NERC over the past year appears to have shifted away from strongly defending the grid, markets and operations. While PJM is still insisting that the grid is not facing an emergency, the tone seems to have shifted. Is some of that shift due to political pressure from the DOE, stakeholders and the generators that are going to lose their plants?

I don't view it as a shift.

What would you call it then?

About this time last year or maybe 18 months back, folks were talking about concerns over certain retirement trends. Our answer has consistently been we don't see those trends being a problem. We're looking at the retirements, we have a procedure to look at retirements, we look after reliability.

I've had conversations. One was with Gov. [John] Kasich of Ohio, for example, who said there may not be a problem now, but if these retirements keep happening, at what point would we have a problem? I'm like, you know what, it's a legitimate question.

I've had very similar questions asked by people on Capitol Hill, various people on the Senate Energy and Natural Resources Committee. In fact, I think Sen. Lisa Murkowski, [who chairs the committee] asked during an open hearing, "At what point would you have a problem." I've certainly been asked that question by various agencies, DOE, etc. That's exactly what this fuel security study answered, and that's why we did it, because those were legitimate questions that I was being asked specifically.

But it seems like it is an extreme scenario, and grid operators have never been in the business of looking at very extreme, long-ended hypotheticals. Instead, you do long-term planning.

I had the question from states, I mentioned one, but there were others. I had Congress ask that question. I had the administration ask me that question. I've never been asked those kinds of questions before.

And from so many places, I'm guessing.

Right. And you couple that with the trend where you have people who intentionally attack infrastructure. We've never seen that before, it's unprecedented. My point is, that's why we did what we did; it's not because of changing circumstances, it has nothing to do with political pressure.

But you just said it did have something to do with it. You said it was political pressure but it was logical political pressure.

That's my point, it's not political pressure in the sense of you've got to save this power plant. That would have been political pressure, in my opinion. What they're saying is, have you looked at these different changing circumstances. That is a legitimate question.

So has the DOE come to you at any point and said, "We need to save certain power plants; can you help us try to figure that out?"

No, I mean obviously they had had a position, and I had a very public reaction. But as far as a meeting sitting down to talk about that, no.

As for the results of your study, which you are now providing with more details about the scenarios you used, can you talk about how that new information may prove useful?

What it will do is allow people to better understand the implications of one assumption versus another and how it will impact the results. In other words, are you shedding load less, are you not shedding load at all.

As I suspect one of the main issues we need to look at is to understand how fuel replenishment infrastructure works. Because you hear the same thing in New England where you have liquid fuel backup [for power generation in winter] but there's no incentive to pay for it, there's no payment in the market for people filling their fuel tanks.

Another is, quite frankly, depending on which side of the debate you are on, [some people think] either our study was way too optimistic or way too pessimistic.

I've had certain discussions with folks in the government about pipeline disruptions. Should we assume the pipeline's out for four days, should we assume the pipeline's out for 10 days? Even though we didn't run the specific scenario [some may have wanted to see], they would at least be able to see what the trend would be and then maybe better inform what they could ask us to run in a following study.

Unless technology all of a sudden births a new way to produce electricity, I think we're going to get to the point where we at PJM are as dependent on natural gas infrastructure as they are in New England. And something changing could be a new technology — people talk about modular nuclear or whatever — but the trend looks like we're going to continue to have more renewables, more gas, more alternative technologies.

The way I've described this to others is there's a certain obligation for regional grid operators to look at what are the increased risks to infrastructure, whether it be a cyber- or physical attack.

And again, this is a debate I had with folks on Capitol Hill and also at the DOE. Us saying we should be able to handle [an] incident, that's different than what if there are 10 pipes attacked. At some point, it becomes an act of war, and you know it's probably not within our purview to deal with it, it's more of a national security issue.

So if I am reading between the lines and you are saying there is a potential gap that needs to be addressed but not necessarily to the extreme levels that someone might potentially politically want you to consider?

Correct. So my point is, there's no emergency, there's no burning platform, we have time. As for the basic question of how are we going to handle liquid fuel replenishment incentives and how are we going to handle this issue of this infrastructure vulnerability, we should have a good amount of progress on those two questions by the end of 2019.

Given you expect to spend 2019 working with stakeholders, does that mean you aim to file something with FERC in early 2020?

I'd say the first quarter, and it might be just insights, depending on how the debate goes.