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Washington Week: NERC, PJM to issue final reports on plant retirement impacts


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Washington Week: NERC, PJM to issue final reports on plant retirement impacts

Two highly anticipated reports due out this week could influence the debate over what federal policies, if any, are needed to keep the U.S. electric grid stable amid a wave of coal-fired and nuclear plant retirements.

The North American Electric Reliability Corp. and PJM Interconnection are set to release highly anticipated final reports on how the U.S. bulk power system will handle expected generation retirements and possible fuel security risks from utilities' rising reliance on natural gas.

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Exelon Corp.'s Three-Mile Island plant in Pennsylvania is one of several nuclear plants in the PJM region that are set to close in the coming years.

Source: S&P Global Market Intelligence

PJM will release its full fuel security report Dec. 17, which will explore the grid's likely performance under more than 300 different scenarios, including more rapid and larger-than-expected losses of coal-fired and nuclear capacity in the region. The grid operator issued a summary of the report on Nov. 1, which found that PJM's system can handle expected generation retirements but that load shedding and other problems could arise in five or so years under some extreme scenarios.

A day after PJM releases its completed study, NERC will discuss its own "stress test" scenario to evaluate the potential impacts of accelerated plant retirements.

In a draft report that S&P Global Market Intelligence obtained in October, NERC warned that accelerated coal and nuclear unit closures over the next several years could lead to power outages, shortfalls in surplus generation and transmission problems in several regions. But NERC emphasized its upcoming stress-test scenario is only meant to identify risks and is not a forecast.

The reports are part of a broader debate on whether grid operators, the federal government or the U.S. Congress should craft policies to keep economically struggling coal and nuclear plants online to ensure grid resilience and reliability. Under the Trump administration, the U.S. Department of Energy has considered invoking emergency authorities to demand better compensation for "fuel-secure" plants that might otherwise shut down. But the Federal Energy Regulatory Commission rejected one such request from the DOE, while gas and renewable energy industry groups have panned those proposals as anti-competitive, unnecessary and costly for consumers.

Zinke to step down

U.S. Interior Secretary Ryan Zinke will step down at the end of 2018, President Donald Trump and Zinke tweeted Dec. 15. The decision came amid a series of investigations into Zinke's travel, political activity and potential conflicts of interest.

After Zinke's departure, Interior Deputy Secretary David Bernhardt will likely take charge of the agency until a replacement for Zinke is nominated and confirmed. Bernhardt, who is a former oil and gas company lobbyist, has backed Zinke's directive to develop a new five-year leasing plan for the Outer Continental Shelf that would exclude restrictions the Obama administration put in place in its five-year plan for 2017-2022.

Bernhardt also helped propose a replacement for sage grouse protections the Obama administration released in 2015, with the current administration's plan potentially opening up more Western lands to energy resource development.

Shutdown looms for EPA, Interior

A short-term continuing resolution to fund parts of the federal government will expire on Dec. 21, meaning the U.S. Environmental Protection Agency and Department of the Interior could soon face shutdowns unless lawmakers and Trump can agree on another appropriations measure.

Trump has already signed several appropriations bills into law for the fiscal year 2019, including for the DOE and FERC. But Congress has yet to pass individual spending bills for several other agencies, including the EPA and Interior, which are currently being funded through the short-term resolution that runs out Dec. 21. With time short for action, the potential for a shutdown looms after Trump threatened a government shutdown if he did not get more funding for a wall along the U.S.-Mexico border.

During a three-day shutdown in early 2018, former EPA Administrator Scott Pruitt advised staff to follow through on their normal work schedules, saying the agency had sufficient resources to operate for a limited time. But the EPA's contingency plan at the time said that only "exempted or excepted" activities, including Superfund response site work and emergency response readiness for chemical or hazardous material spills, should continue in the event of a shutdown.

Despite the funding fight, Congress scored a legislative victory after passing a multi-year farm bill that headed to the White House on Dec. 13 for Trump's signature. The legislation includes measures to help rural utilities invest in infrastructure projects and eased language in the U.S. Senate's version of the farm bill that would have made repaying government loans more difficult for rural electric cooperatives.

FERC to meet

FERC's next open monthly meeting is scheduled for Dec. 20. The commission will be joined by new member Bernard McNamee, who was sworn in at the agency on Dec. 11. The addition of McNamee will give Republicans a 3-2 majority at FERC, although GOP member Kevin McIntyre has not voted on any agency orders since Oct. 17 due to ongoing health problems.

Some stakeholders, including Senate Democrats and environmental groups, have pressed McNamee to recuse himself from any matters before FERC that touch on a DOE coal and nuclear assistance plan that he helped craft while a deputy general council at the department. More broadly, they said he should not participate in any proceedings that involve rates for "fuel-secure" generators or that may pit one energy resource against another.

COP24 conference wraps up

Following about two weeks of talks, the 24th annual session of the Conference of the Parties to the U.N. Framework Convention on Climate Change, known as COP24, wrapped up in Poland on Dec. 15.

At the end of the conference, more than 195 countries, including the U.S. and China, adopted rules for implementing the Paris Agreement on climate change, which aims to reduce greenhouse gas emissions enough to limit global warming ideally to 1.5 degrees C and to 2 degrees at the most from pre-industrial levels. The newly adopted rules will dictate how participating countries provide information about their emissions reduction targets, mitigation and adaptation measures; and assess progress on the development of related low-carbon technologies.

But the gathering did not change the U.S.'s plans to withdraw from the Paris agreement in 2020. The U.S. also joined Russia, Saudi Arabia and Kuwait in refusing to endorse a recent report by the U.N. Intergovernmental Panel on Climate Change that found the world effectively has until 2030, much earlier than previously expected, to significantly reduce emissions and limit global warming to 1.5 degrees C.

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Federal agencies
Dec. 17

Comments are due on the EPA's proposed amendments to new source performance standards for new, reconstructed or modified oil and gas sector sources.

Dec. 18

The U.S. Court of Appeals for the District of Columbia Circuit will hear oral arguments in Arizona v. EPA (No. 15-1385), a case involving the EPA's 2015 National Ambient Air Quality Standards for ozone.

Dec. 20

FERC will hold its monthly open meeting at the commission's headquarters in Washington, D.C.

Industry events

Dec. 17

The PJM Interconnection will release its full fuel security paper.

Dec. 18

The North American Electric Reliability Corp. will hold a webinar to discuss its "Generation Retirement Scenario," which incorporates significant plant retirements into an aggressive time frame to identify potential grid stability risks.

Notable stories from last week

Supreme Court takes case with possibly big implications for federal agency power

Canada finalizes plan to end most coal-fired power generation by 2030

Air pollution experts urge US EPA to reinstate disbanded advisory panels

Energy tax extenders dropped from US House panel's end-of-year tax bill

Court strikes US Forest Service permits for 1.5-Bcf/d Atlantic Coast pipeline

US to become world's 3rd-largest exporter of liquefied gas in 2019