FERC Should Safeguard the Reliability and Resilience of the U.S. Power Grid

In the wake of Winter Storm Elliott, multiple states were once again faced with a serous emergency which highlighted the fragility of the US Electricity Grid. Dispatchable power generation retirements have accelerated, and the Federal Energy Regulatory Commission (FERC) should act immediately to ensure needed reliability attributes like fuel security are valued appropriately and compensation is sufficient to maintain the resources, like coal, that provide those attributes.   

In early 2021, FERC initiated Docket No. AD21-10 to consider resource adequacy in the evolving electricity sector, holding a total of four technical conferences involving the Regional Transmission Organizations (RTOs), Independent System Operators (ISOs) and other interested stakeholders on the topic. During the course of the docket, FERC renamed the proceeding from Resource Adequacy in the Evolving Electricity Sector to Modernizing Wholesale Electricity Market Design.

Based on a FERC staff whitepaper, the input at these technical conferences and in comments received, in April of 2022 FERC issued an order that directed every RTO/ISO to file a report regarding their changing system needs and the plans they were making to reform their markets to address those changes. One question Commissioner James Danly included in his concurring opinion in that order was, “Are price signals providing the proper incentives for the orderly entry and exit of the correct type and quantity of generation to ensure resource adequacy and reliability? If not, why not, and what needs to change?” 

In October 2022, in response to FERC’s requirement, reports were filed by the RTO and ISOs, including PJM Interconnection (PJM) and the Midcontinent Independent System Operator (MISO). Both PJM and MISO reported uncertainty and volatility caused by the transition from dispatchable sources of energy to intermittent wind and solar. Both warned that dispatchable resource retirements and an increased dependence on wind and solar were increasing reliability risks in their regions.

In its report, PJM stated, “If fuel assurance is not valued, acquired and compensated in the near term, there could be retirements or inadequate investments of resources that are necessary to serve load at times when Intermittent Resources may not have an energy source.” PJM attributed the increase in uncertainty in its markets to “the retirement of thermal resources and the growing quantity of distributed energy resources,” and proposed a solution that included properly incentivizing and compensating for flexibility attributes.

Comments filed by the Midcontinent Independent System Operator (MISO) said much of the same. MISO stated that it “must ensure that sufficient resources with the capabilities and attributes the MISO footprint needs will be available during the highest risk periods across the year” and noted its effort to identify and designate reliability attributes. Of MISO’s six identified attributes, coal resources provide five and similarly can provide the bulk of the attributes that PJM has identified. Yet, an alarming amount of coal-fired generating capacity has publicly announced plans to retire; as of December 2022, almost 106,000 MW. In addition, six EPA rules are certain to cause even more coal plant closures unless the agency takes steps to avoid causing retirements that would further jeopardize grid reliability and resilience.    In our submitted comments to FERC, America’s Power urged FERC to act promptly to safeguard the reliability and resilience of the grid by ensuring that needed reliability attributes are valued appropriately to mitigate further premature retirements of resources like coal with characteristics the grid needs to remain reliable. Read our full comments here.