ERCC on NERC

November 29, 2011

Scott Segal, director of the Electric Reliability Coordinating Council, offered the following remarks on Nov. 28, 2011:

Today, the North American Electric Reliability Corporation (NERC), the electric reliability organization certified by Federal energy regulators to establish and enforce reliability standards, issued a follow-up report on the impacts potential EPA regulations on the power sector may have on electric reliability.  ERCC welcomes this timely analysis.

Like ERCC’s own analysis reflected in recent communications to the Office of Management and Budget, NERC cautions the EPA to consider the “time and scope of regulation” and to take into account effects “on bulk power system reliability.”  Recently, in response to briefs filed in the American Nurses Association case, EPA made no attempt to defend its lack of analysis of reliability effects.  The Federal Energy Regulatory Commission itself told members of the Senate Energy and Natural Resources Committee that it had no formal consultations with EPA regarding reliability concerns.  To these facts, NERC finds that, “Coordination is needed among federal agencies to ensure the industry is not forced to violate one regulation in order to meet another.”

Additional flexibility to date in EPA rules is not sufficient as long as EPA adheres to unreasonable scope and timing of pending regulations like the Utility MACT standard.  NERC finds:  “While more flexibility is provided in some proposed rules, the cumulative effect from environmental regulations may reduce reserve margins in ways that could affect bulk power system reliability, depending on the scope and timing of final regulation implementation.”  Specifically, NERC continues to find challenges related to timing, disparate regional impacts, outage coordination,  transmission and operational issues, and uncertainty.  NERC CEO Gerry Cauley is clear:  “To ensure bulk power system reliability, sufficient time and certainty to schedule retrofits of more than 500 units, as well as acquire replacement resources or prepare system reinforcements is needed.”

Some have claimed that the new NERC assessment shows lower projected retirements.  That is simply because NERC no longer includes announced retirements in its estimates.  However, even a cursory examination of announcements made regarding those retirements lends strong credibility to the notion that the threat of inflexible EPA regulations has been a major factor in causing those projected retirements.  As NERC cautions, “Though this amount appears lower than the 2010 assessment projected, 25 GW of retirements have been announced since then and are no longer included in the projected retirement numbers. More importantly, industry information continues to show that significant retrofits will be needed over the next four years in order to comply with proposed utility air toxics regulations.”  For a more complete picture of reliability impacts, we believe it is appropriate to include both announced and anticipated retirements occasioned by EPA power-sector rules.

NERC’s statement can be found at http://www.nerc.com/fileUploads/File/News/PR_LTRA28NOV11.pdf  

NERC’s full 2011 Long-Term Reliability Assessment can be found at http://www.nerc.com/files/2011LTRA_Final.pdf  

ERCC’s Nov. 14 letter to OMB, dealing with reliability, can be found at http://www.electricreliability.org/ercc-letter-oira-administrator-cass-sunstein   

Scott H. Segal
Director, Electric Reliability Coordinating Council

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