Costly market distortions won’t improve grid resiliency

Energy policy in the minds of American consumers is simple: People want the lights to come on when they hit the light switch, and no one wants to pay more than necessary. Overwhelmingly, most Americans want clean energy too — irrespective of party affiliation. That’s why the Grid Resiliency Pricing Rule raises so many question marks.

A thoughtful conversation about the state of the nation’s electrical grid is long overdue. Most energy policy experts welcomed a report (grid study) issued in August by the U.S. Department of Energy (DOE) that assesses the resiliency and reliability of the grid and provides an overview of our rapidly changing electricity markets.

{mosads}The report is not perfect, but it serves as a useful jumping-off point for numerous stakeholders to share their expertise and opinions so a well-informed, coherent policy approach can be developed.

While the administration should be applauded for opening this discussion, it is now moving far too quickly to wrap it up. Following the release of the August report, Secretary of Energy Rick Perry asked the Federal Energy Regulatory Commission (FERC) to immediately finalize provisions for a Notice for Proposed Rule Making. FERC opened a public comment period and asked experts to address questions on the need for reform, eligibility, rates and implementation — with the expectation that comments would be received, reviewed and a final rule would be complete in December.

This three-month timetable is ridiculous by almost any regulatory standard. Furthermore, it is completely unwarranted since the Department’s own grid study concluded that there is not actually an imminent reliability emergency.

Winter is coming — but a tight rulemaking timeline and a policy favoring just two types of production is not necessary to “prevent the potential failure of the grid from the loss of fuel-secure generation — as almost happened during the 2014 Polar Vortex.” Diverse energy sources — and wind energy in particular, kept the lights on during the Polar Vortex while coal piles froze and gas pipelines couldn’t keep up with demand.

True, nuclear generators were important in passing the test, but hasty implementation of the proposed Grid Resiliency Pricing Rule is still a solution in search of a problem. Especially considering coal plants accounted for 26 percent of the unplanned power outages during the Vortex.

Moreover, the plan to save at-risk coal and nuclear plants is expensive, costing ratepayers between $1 billion and $4 billion annually through 2030. The Departent’s grid study is a useful resource, but it doesn’t justify a costly intervention that would yield questionable results.

Ultimately, there must be a high threshold to justify permanent changes to the regulatory framework covering the grid and its related infrastructure, especially when it comes to favoring any one energy resource or generation technology over another.

Assuring reliability and resiliency from the grid is a complicated issue, and it will have implications for decades to come — so we must get it right. Any rulemaking must be informed by the best and most up-to-date technical information available, along with an eye toward the types of advanced energy technologies that can help avoid future problems.

CRES Forum recommended to FERC that they take their time, understand the lessons learned from past extreme weather events, and develop real solutions that are backed by the best possible data and the best possible technical information for rulemaking.

To date we have been well served by an “all of the above” approach to energy that enhances reliability and keeps costs decreasing for consumers. The federal government can help us do better by stimulating growth and competition in the energy sector — not dictating production quotas or protecting a given industry at the expense of entrepreneurs and small businesses that are foundational to our economy.

If the Energy Department and FERC are serious about making our electric grid more resilient, the administration should catch its breath and ensure we are prepared not just for winter, but any event that would jeopardize the reliability of the electric system we all depend on.

Charles Hernick is the director of Policy and Advocacy at Citizens for Responsible Energy Solutions (CRES) Forum, a nonpartisan, nonprofit organization committed to educating the public and influencing the national conversation about clean energy.