This Thanksgiving, Resilience & Reliability Still Matter

Opinions about DOE Rick Perry’s bold moves to kick-start the regulatory policy discussion regarding resiliency and reliability of the electric grid are swirling around and piling up like the abundant autumn leaves here in D.C. 

And as energy lobbyists and lawyers gather around Thanksgiving dinner, many of them can give thanks for the plethora of panel discussions, op-eds and client billing opportunities the Section 403 process has yielded just since the end of September. If the process continues to generate an open discussion of what resources are needed to ensure all Americans have affordable, reliable energy across a range of contingencies, and drives to common-sense solutions, then consumers can be the next to give thanks.

After DOE released its Notice of Proposed Rulemaking in late September, FERC established Docket RM18-1-000 with a tight turn-around for initial and reply comments. The response was overwhelming, with hundreds of comments provided. That’s appropriate, as the electricity markets are complicated beasts with tens of thousands of pages of rules, and each state government and corporate player therein is also unique. When the shape and constraints of the physical grid are layered in, the sheer difficulty of finding even the broad outlines of solutions looms large.

Facing a Gordian knot of ideological rhetoric, economic consequences, and politics, current FERC Chairman Chatterjee has kept the momentum going, revealing his ideas for an interim solution that could help keep vulnerable baseload plants online and in reserve until the industry, regulators and congressional stakeholders can purposefully approach solutions.

As winter approaches, his idea is essentially that FERC can use Federal Power Act Section 206 to require RTOs to pay some compensation to nuclear and coal plants that have resilience attributes but also are economically vulnerable to leaving the marketplace before final rules on resilience are sorted out (and litigated). He also contemplates FERC moving to a longer-term rulemaking in 2018.

Stepping away from the economic analyses and rhetoric around this issue, and thinking about Thanksgiving travel as an analogy – millions of consumers will be grateful this week that our interstate highways have extra lanes, and will wish that airlines kept more planes and crews in reserve. When some reach their destinations, they’ll be chagrined at ride-share surge pricing. There is no perfect marketplace for travel, and there isn’t one for electricity either, especially for consumers. FERC and DOE are responsible for making sure that special events and periods of high demand go as smoothly as possible and present as few price shocks and inconveniences for consumers as can be managed.

With new FERC Chairman McIntyre likely seated this week, it remains to be seen whether the resiliency football DOE kicked off and Chairman Chatterjee caught to run a first down will continue down the field, but from where PACE sits, the interim solution and continuing the discussion would rank as a touchdown and extra point for consumers.


Driving to the Future in Electric Vehicles

The NARUC community has come to count on the Edison Foundation’s Institute for Electric Innovation (IEI) for creative and informative events alongside the official meetings. A breakfast panel on Tuesday brought together large utilities (Southern Company, BGE), environmentalists (the Energy Foundation) and EV consumer advocates (Plug in America).

Led by Phil Jones, a revered former PUC Commissioner from Washington state, now Executive Director of the new Alliance for Transportation Electrification, the panel united around strong support for electric vehicles and utilities’ central role in bringing the necessary charging infrastructure online. Regulators are just beginning to grapple with what a senior spokesman from BGE aptly called the “chicken and egg” problems. If utilities lean in and build the chargers, will carmakers and customers build and buy the vehicles? If we collectively invest in today’s fast chargers, will technological changes make those obsolete while the payments are still due?

Electric vehicles are still less than one percent of U.S. vehicles sales; however, IEI projects the number of EVs on the road will reach 7 million by 2025, or about three percent of passenger vehicles. Anywhere from 3 to 5.5 million charging stations will be needed. Right now, the U.S. has well under one million. The panel agreed that electric utilities are closest to the customer and therefore best suited to lead the charging initiative, even if utilities do not ultimately own all the facilities. They also agreed on the environmental benefits of reducing gasoline-based emissions.

Consumers are comforted by EVs’ TCO (total cost of ownership) which comes in lower than conventional vehicles because of the absence of fuel purchases and routine maintenance. But consumers still have questions about time to charge, battery life and traveling range. A roster of available EVs shows many appealing options, but only Tesla yet offers range over 200 miles; the lowest stated MSRP is $28,995 for a small car with 125-mile range.

Yet, because of the great possibilities EVs bring in environmental benefits and energy storage, BGE and Southern Company both exhorted the audience to dream big and get excited. Southern also asked everyone to focus on making sure that EVs are seen as being available to everyone, not just upper income levels.

I got enthused enough by the presentation to take advantage of Plug in America’s on-site test-drive offer. I drove my cousin’s Tesla S a few years ago, and while I’m not given to hyperbole, acceleration and the total driving experience made me feel as though I was visiting the future. This time I took out the EV BMW i3 (MSRP starting at $42,400) and PHEV BMW X5 x Drive40e (MSRP starting at $65,645). Both felt like regular cars, maneuvered well in city traffic and had every comfort including awesome sound systems.

Now, I was told I was the only test-driver to ask if the cars had a tow package. But that hearkens back to Southern Company’s comment about getting every demographic excited – we need to see charging stations at the ag co-op, the first EV pickup truck, and a robust used EV market.

PACE will continue to engage in the EV conversation and look forward to talking with partners all over the country about the exciting days ahead.


State Regulators Advance Critical Energy Conversations

The nation’s regulatory utility commissioners are gathered in Baltimore, Maryland for their 129th annual meeting. I’m pleased to represent PACE and raise awareness about our partnerships all across the country and our mission of driving policies that deliver reliable, affordable energy to consumers.

It’s not just the brisk, wintry temperatures here in Baltimore keeping attendees focused on where consumers will get their energy and what it will cost. Several sessions across the 4 days of meetings delve into these important questions.

The Solar Energy Industries Association (SEIA) convened an early morning breakfast yesterday to discuss the pending Federal Trade Commission (FTC) “Suniva” case over solar panel imports and advocate against tariffs. A bipartisan pair of the FTC Commissioners has recommended setting a quota and a down-adjusting tariff lasting four years. Talking here with Ken Colburn, principal and U.S. program director for the Regulatory Assistance Project, he observed that market forces and technology improvements are driving such strong photovoltaic development, any tariffs are likely to only pose a bump in the road.

In the Natural Gas Committee, a panel including Mississippi Commissioner Brandon Presley examined opportunities for natural gas access and expansion. There are still underserved areas for direct use of natural gas. In Q & A, commissioners asked for information about how natural gas distributors work with communities to expand citizens’ energy choices.

With fewer pieces of energy legislation moving in Congress, are states stepping into arenas and decision-making that belong on the federal level? Former FERC Commissioner Tony Clark expounded on myths and facts surrounding electricity restructuring and the reality that “deregulated markets” often require a great deal of, well, regulation and fail to deliver lowest cost services to end use consumers. You can read more about his views in a recent paper. Marc Spitzer, also a former FERC Commissioner, reported on the price spikes Germany has seen due to its decision to remove nuclear from its portfolio and warned about natural gas plants in the U.S. being forced “out of the money” under current market designs.

The Federal-State tension discussion continued in the afternoon, where a general session gave Sean Cunningham, Executive Director for DOE’s Office of Energy Policy and Systems Analysis, a platform to explain the agency’s “Section 403” proposed rule concerning resiliency. Earlier in the day, a Harvard speaker with environmental interests called DOE’s document too “flimsy” to support a new rule.

Mr. Cunningham spoke up strongly for the all of the above concept that PACE consistently supports. He shared DOE’s drive to ensure that all fuel resources are available to manage the grid and consistently fulfill the obligation to serve. Like panelists earlier in the day, he too opined that in many instances, the “artificial rule-based” regional electricity markets are in need of attention and repair.

Healthy debate will continue here at NARUC through the middle of the week, so on Thursday PACE will bring you a second update on the information exchange and impacts for consumers.