EPA Clean Power Plan to Cut Reliability, Cost Billions of Dollars, FERC’s Philip Moeller Says

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By Lynn Garner

Dec. 2 — A federal energy regulator issued a harsh critique of the Environmental Protection Agency's clean power plan, predicting it will threaten electric grid reliability and cost billions of dollars to implement.

Philip Moeller, a member of the Federal Energy Regulatory Commission, said in a Dec. 1 letter to EPA Administrator Gina McCarthy that the EPA's proposed rule “will dramatically interfere with America's competitive market forces, perhaps resulting in even more greenhouse gases in the future.”

“I am concerned that the costs of the CPP could total hundreds of billions of dollars,” Moeller said, referring to the clean power plan. “But my primary concern relates to implications of the CPP on the reliability of the nation's electricity system.”

Moeller Urges More Transparency

Moeller, one of two Republicans on the five-member commission, said his fears have only worsened in recent months as he talks with the utility industry. He renewed his call for a more “formal and transparent process” with FERC to ensure grid reliability.

Moeller has frequently expressed concerns this year in commission meetings, conferences and in a July hearing on Capitol Hill, but the letter represents his strongest condemnation yet of the EPA's proposal.

He expressed concern that state implementation plans “will be extremely inefficient in a system of interstate regional electric markets.”

He also questioned the EPA's assumptions for replacing coal-fired generation with natural gas, casting doubt on whether enough new natural gas pipelines and electric transmission lines can be built to provide replacement power.

House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) has expressed similar concerns, asking FERC in a Nov. 24 letter to document in detail its consultation process with the EPA over the past 18 months, to convene a technical conference on grid reliability and to establish a more formal documentation process going forward.

Upton was joined on the letter by Sen. Lisa Murkowski (R-Alaska), who is in line to become the next chairman of the Senate Energy and Natural Resources Committee in January.

The comment period for the EPA's proposal to lower carbon emissions from power plants closed Dec. 1. About 1.6 million comments were submitted.

LaFleur Favors Regional Approach

FERC Chairman Cheryl LaFleur has taken a more sanguine view of the EPA rule, expressing concern with grid reliability but also voicing confidence that stakeholders and regulators will rise to the challenge.

LaFleur, participating Dec. 2 in a panel discussion at the National Summit on Smart Grid and Climate Change, said she favors a broad regional approach by the states as they develop their plans to implement the EPA clean power plan.

The electric grid operates regionally and not strictly along state boundaries, LaFleur said. There will be a great deal of opportunity for reaching regional solutions in order to implement the final rule, she said.

FERC, which regulates wholesale electricity markets, will have a key role in implementation of the EPA's rule, LaFleur said.

“To the extent that compliance with the various state implementation plans necessitates relooking at the way the regional [electric] markets work, that would fall to FERC,” LaFleur said.

FERC also has a big role regarding the energy infrastructure in terms of assuring there is adequate compensation in rates for building new transmission lines and natural gas pipelines. “Those are both big facilitators of some of the strategies in the clean power plan,” LaFleur said.

Conference participants such as Siemens AG, EnerNOC Inc. and National Grid PLC, who are involved in developing new smart grid technologies, were optimistic regarding the role that new technologies can play in addressing more stringent carbon standards and climate change.

To contact the reporter on this story: Lynn Garner in Washington at lgarner@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

FERC Commissioner Philip Moeller's letter can be found at: http://www.ferc.gov/about/com-mem/moeller/moeller-12-02-14.pdf.