State Regulators Debate Reliability and Transmission at House Hearing

February 27, 2024

Research from MIT is clear: Congressman Peters’ BIG WIRES Act would lower energy prices for consumers and increase grid reliability during severe weather by moving energy from where it’s produced to cities that need it. He discussed the bill at a recent subcommittee hearing.

Read more about it in this February 14th piece from RTO Insider, posted below:

State Regulators Debate Reliability and Transmission at House Hearing

By James Downing

February 14, 2024

House members and their state regulator witnesses split Feb. 14 over how much an expanded transmission grid could enable a reliable transition to a low-carbon future.

“Threats to electric grid reliability are growing due to environmental regulations, policies from state legislatures and agencies, bans on fossil fuel generation, and market distortions,” said Rep. Jeff Duncan (R-S.C.), chair of the House Committee on Energy & Commerce’s Subcommittee on Energy, Climate and Grid Security. “These factors are contributing to premature retirement for most of our reliable and dispatchable resources. Because of the increasingly interconnected nature of the grid, policy decisions that affect grid reliability have a much wider impact than ever before.”

Rep. Scott Peters (D-Calif.), who also sits on the subcommittee, has introduced legislation to help address some of those reliability concerns by requiring minimum transfer levels between regions. (See Hickenlooper and Peters Introduce Big WIRES Act.) He agreed with Republicans on the committee that policymakers need to address resource adequacy with growing demand from electrification, data centers and new industries.

“Multiple analyses recently from MIT and Columbia have shown that the Big Wires Act, which I and Senator Hickenlooper introduced, would save customers hundreds of millions of dollars while keeping the lights on during natural disasters and other challenges,” Peters said. “These costs and reliability benefits are driven by the ability of high-demand regions to use energy from other regions that don’t need it at that time.”

Duncan doubted that increased transmission could be a cure-all for the country’s reliability woes, calling instead for maintenance ofexisting dispatchable generation.

“Systems must be overbuilt to ensure there’s power when the sun is down and when the wind isn’t blowing,” Duncan said. “Building more transmission also raises utility costs for American ratepayers, even if those ratepayers may not directly benefit from the added transmission.”

California and New England have adopted similar policies driving their grids to zero out emissions, but both rely on imports from other areas, and both have some of the highest electricity prices in the country, Duncan added.

Georgia Public Service Commissioner Tricia Pridemore touted the reliability of her state’s vertically integrated structure.

“Georgia is in need of more power than ever before,” she said. “Our market structure makes us more energy-secure than other regions; we have the authority to instruct utilities to construct generation and build transmission. The state of Georgia holds a compact with a vertically integrated utility, and they must generate what our state consumes.”

While the Vogtle nuclear plant’s cost overruns might have made a lot of headlines and increased her consumers’ bills, she said that the Peach State still has rates 10% below the national average.

Peters asked Pridemore whether Georgia would exclusively rely on its own power plants, given that it is connected to five other regions of the Eastern Interconnection.

While Georgia is connected, the regulatory compact the state has with Southern Co.’s Georgia Power requires it to produce all of the power the state needs, she said.

“You mentioned blackouts and forced outages earlier,” Pridemore said. “You can look at the last three winter storm incidents, and the number of blackouts and outages that we had were so minimal. They were just those that were caused by downed trees and localized events.”

Pridemore called for easing regulation of pipelines, and Peters asked whether she thought that effort should be extended to transmission. Pridemore answered that she is “satisfied” with how Georgia manages electric transmission.

Colorado, the only state with a carbon policy at the hearing, was represented by Keith Hay, senior director of policy in the state Energy Office, who said the state’s goals are not too difficult to achieve with the resources it can access.

“Our modeling shows that under the business-as-usual approach, which is the lowest-cost scenario that meets a 2040 load growth of 40%, the Colorado grid can achieve a roughly 94% reduction in greenhouse gas pollution,” Hay said. “It does this by adding significant amounts of wind, solar and batteries while retaining a gas generation fleet that is approximately the size of today’s.”

While the gas plants will still be there, their capacity factors would drop significantly over time according to the model: By 2030, only one natural gas unit approaches a 20% capacity factor, and by 2040, natural gas will produce just 2% of the state’s electricity, he added.

“The analysis strongly indicates that expanded transmission capacity, both in-state and interregional, which will enable reaching regions of high renewable potential and allowing access to energy from across diverse geographic areas, will be important to reliably meeting Colorado’s electric needs,” Hay said.

Indiana has seen coal fall from 90-95% of its electricity 20 years ago to about 45% today, with the rest coming from natural gas, nuclear, wind, solar and other fuels, said Utility Regulatory Commission Chair Jim Huston. While Colorado has found no major issues in moving to a net zero future, Indiana has said it would face difficulty meeting the requirements of EPA’s power plant rule.

“Our concerns included a focus on the proposed rules’ unrealistic timing, particularly in the context of the utilities’ state-sanctioned and regulator-reviewed integrated resource plans,” Huston said. “It is not obvious that the proposed environmental benefits outweigh the other pillar considerations that state regulators must consider to ensure safe, reliable service at affordable rates.”

Arizona also has seen cost issues from shutting down fossil fuel-fired plants early, said Corporation Commissioner Nick Myers.

“Many of the challenges we face moving forward with regard to reliable generation center around early forced retirement of coal plants without adequate replacement,” Myers said. “Personally, it pains me to have to approve accelerated cost recovery for early shutdown of coal plants, while at the same time authorizing recovery on new purchase power agreements.”

The replacement generation usually has to come with backup natural gas and transmission, which Myers said makes its all-in costs higher. The transmission also presents its own roadblocks, as Arizona had to deal with multiple iterations of the SunZia Transmission project and its 16-year development journey, marred by lawsuits and red tape.



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