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First Steps: Bipartisan Cooperation to Ensure Electric Reliability

By Jennifer Macedonia

Monday, June 3, 2013

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A bipartisan bill provides hope that Congress can come together on grid reliability and energy policy

In an era of tense partisanship, we should celebrate those occasions where members of both parties work together to craft legislation aimed at solving problems in a balanced way. On May 15, 2013, the House Energy and Commerce Committee unanimously approved H.R. 271, the Resolving Environmental and Grid Reliability Conflicts Act of 2013, which aims to protect electric reliability. It passed on the House floor by a voice vote on May 22 and is awaiting consideration by the Senate. The bill amends the Federal Power Act to protect a regulated electricity generator from liability for violating an environmental law or regulation in the, thus far, rare circumstance where the Department of Energy is authorized to order emergency operation for electric grid reliability.

As a result of concerns with a similar bill introduced last year by Rep. Pete Olson (R-TX), House Energy and Commerce Committee members from both sides of the aisle engaged in “serious, substantive negotiations” that produced a compromise bill intended to both protect electric reliability and provide some environmental safeguards.

There has been heated Congressional debate over the potential impacts of environmental regulations, such as the Mercury and Air Toxics Standards for Power Plants, on electric system reliability and concern that compliance costs would trigger retirements or curtailments of the higher-emitting electricity generators in the fleet. Several recent studies, such as by the Congressional Research Service, Resources for the Future (April 2013; May 2012), The Brattle Group, and the Bipartisan Policy Center, provide some reassurance that compliance with forthcoming environmental requirements is unlikely to cause broad reliability impacts, including because of the existing options to identify and resolve any localized impacts.

Nonetheless, power companies and local, state, and federal officials are preparing for unprecedented changes in the network of electricity generating units that supply electricity to homes and businesses across the country. The impacts of low natural gas prices, aging infrastructure in the generating fleet, increasing penetration of renewable energy and energy efficiency, and extreme weather events that increasingly impact electric system reliability are converging with upcoming deadlines phasing-in health protections under the decades-old Clean Air Act. Such a paradigm shift in the system that powers our economy is bound to generate some wariness, particularly as studies warn that some areas of the country (particularly Texas and Southern California) may be vulnerable to a variety of forces that risk electric system reliability.

The U.S. has a series of electric reliability safeguards in place, such as electric reserve margins, reliability standards, and Federal Power Act emergency order authority. In addition, electric reliability is closely monitored by a network of local, state, regional, and national actors including regional transmission organizations, independent system operators, state utility regulators, power companies, the North American Electric Reliability Corporation, the Department of Energy, and the Federal Energy Regulatory Commission.

The existing Federal Power Act authorizes the Department of Energy (DOE) to order emergency operation of electric generators if needed to ensure stable electricity supply. In its entire history, the Federal Power Act’s emergency order authority has been invoked in six cases, including two cases with environmental compliance issues. The future could include increased use of DOE emergency orders as the transitioning power sector awaits the completion of transmission projects and faces tight margins, the retirement of aging generators, pollution control retrofit outages, and extreme weather events (including droughts and high temperatures that may disrupt cooling systems and force power plant closures).

The bipartisan bill sponsored by Rep. Olson, along with Reps. Michael Doyle, Renee Ellmers, Gene Green, Adam Kinzinger, Lee Terry, Ann Wagner, and Tim Walberg, aims to address an overlap that could expose a regulated entity to a violation of one law in order to comply with another. The Olson bill is tailored to prevent violation and legal liability from environmental non-compliance for operation of a plant under a DOE emergency order. In an attempt to prevent an exploitable loophole or unintended outcome from the bill’s environmental waiver, time limits and efforts to limit environmental consequences were included.

While H.R. 271 is but one small step in terms of the looming energy policy challenges that await action, this bipartisan effort provides some hope that Congress can come together on electric grid reliability and energy policy. We applaud the efforts of the House and encourage the Senate to swiftly consider the House-passed legislation.

2013-06-03 00:00:00