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The EPA’s Clean Power Plan: Its Effect on Electric Reliability in North America

Event Description and Agenda:

The EPA's Clean Power Plan (CPP), the recent Mercury and Air Toxics Standards (MATS) ruling and the New Source Review (NSR) are poised to re-make electric generation in the United States. These measures will accelerate the decline of coal-fired generation, which currently accounts for just under 40 percent of total generation. Among the many questions this raises, perhaps the most significant one will be the impact this forced shift in generation has on resource adequacy and reliability of the nation's electric grid.

This conference will 1) analyze the components of the CPP, MATS and NSR, 2) appraise the likely impacts that coal-fired plant retirements, and their replacement by gas-fired plants as well as renewables integration, will produce on electric reliability, and 3) seek to address strategies for minimizing adverse outcomes on resource adequacy. The conference will also explore the current status of the EPA's rules and pending legal challenges, as well as the potential for conflict between EPA and other federal and state agencies' mandates and rule-making. Finally, the conference will review the costs associated with the rules, and whether those costs within the various US markets will allow the market constructs to provide the appropriate pricing signals to maintain reliability.


Tuesday, March 31, 2015

12:30 - 1:00 p.m. :: Registration

1:00 - 2:30 p.m. :: Electric Reliability-What it is/Why it Matters

Modern life in North America is predicated on the premise that electric power will be available when wanted and needed. If weather events like Hurricane Katrina and Super Storm Sandy don't point out how vital electricity is, brown and blackouts during times of high demand remind us of the concept of reliability and how forces that take generation off-line, including regulation, can be cause for concern. This session will review reliability from the perspective of the organization charged with maintaining it:

The North American Reliability Council

  • What is reliability?
  • How is it measured?
  • Forces that impact it

Assessing the Impact of the EPA Measures on Reliability

  • How is reliability measured?
  • What are the components of the EPA actions that undermine reliability?
  • Is it possible to follow the published EPA guidelines and still maintain reliability? If so, how does that translate into financial terms?
  • Are there regional differences in the ability of states and the power industry to comply?

The Reliability Organizations' Role

  • NERC
  • WECC
  • SERC

Thomas Coleman, Director of Reliability Assessment, North American Reliability Council (NERC)

2:30 - 2:45 p.m. :: Afternoon Break

2:45 - 3:45 p.m. :: "First, we call all the lawyers…"- Billy Shakespeare

EPA rules and lawsuit challenges are intertwined as certainly as night follows day. Industry critics assert regulatory overreach or that the proposed standards are too strict or unobtainable, whereas environmental stakeholders complain that the rules did not go far enough. This session will review the legal standing of the various rules:

  • MATS
  • Clean Power Plan
  • New Source Review

Scott Segal, Executive Director, Electric Reliability Coordinating Council

John Moore, Senior Attorney - Sustainable FERC Project, Natural Resources, Defense Council

3:45 - 5:00 p.m. :: The States' Role

Each state will be required under the Clean Power Plan to submit its plan for compliance by July of 2016. If a state chooses to join with other states for a regional compliance or cooperative effort to meet the mandates, it has an additional year to submit. If a state fails to submit on time, or if the EPA deems the submitted plan unacceptable, then the EPA will write and administer a plan for that state. This leaves decision-makers (PUC, state legislature, state energy office) in each state with a Sophie's choice: Comply and surrender its right to govern how its citizens receive power and how much it costs, or engage in a lengthy and costly legal battle. In preparing a plan filing, a state will need to consider:

  • Did the EPA properly credit its past efforts at CO2 emissions reductions?
  • Does the state need to incentivize nuclear power plants to remain operating/increase output?
  • Does partnering with other states make sense?
  • Can it meet the mandates in the prescribed timeframe?

Rob Patrylak, Managing Director - Energy Practice, Navigant Consulting

Ken Colburn, Senior Associate, Regulatory Assistance Program (RAP)


Wednesday, April 1, 2015

7:30 - 8:00 a.m. :: Continental Breakfast

8:00 - 9:45 a.m. :: Coal Retirements and Generation Replacement Impacts

Many in the power industry believe the effects of these rules will ripple through electric generation in North America for the next several decades. One significant basis for this view is that the CPP precludes the construction of any new coal plants, unless equipped with expensive and somewhat unproven Carbon Capture and Sequestration (CCS) technologies. Further exacerbating this condition is the likely acceleration of the retirement of coal burning power plants continent-wide. The combination of these two measures contributes to the reliability concerns across many markets. Further, with little prospect for significant gains in nuclear power generation, the bulk of generation currently handled by coal will largely be shifted to current and yet to be constructed natural gas-fired plants and an increasing percentage of renewables. This session will examine:

  • Coal plant retirement and generation loss forecast
  • Gas plant and infrastructure construction forecast
  • The likely role of renewables to fill the gap

Mark Shepherd, Vice President - Environmental Health & Safety, Topaz Power Management, LP

Metin Celebi, Principal, Brattle Group

9:45 - 10:15 a.m. :: Networking Break

10: 15 a.m. - 12:00 p.m. :: Examining Specific Reliability Concerns

While FERC and NERC take no policy positions on the EPA's rules, both agencies are studying possible impacts on electric reliability and gas markets/infrastructure from the rules, especially as they relate to:

  • Accelerating the early coal retirement trend
  • Gas-electric power coordination
  • Physical build-out timing of new generation as a critical reliability component
  • Can market constructs maintain reliability or are they a hindrance?

This segment will consider the potential impacts that the EPA regulations will bring to bear on market forces in the power industry that are already underway.

John Lawhorn, Director, Regulatory and Economic Studies, MISO

Matthew Tanner, Associate Director - Energy Practice, Navigant Consulting

Devin Hartman, Analyst, Federal Regulatory Energy Commission (FERC)

12:00 - 1:00 p.m. :: Group Luncheon

1:00 - 2:00 p.m. :: EPA Clean Power Plan Impacts to Wholesale Markets & Expected Ramifications

Most policy modeling uses a holistic model to get the general trend of policy impact. The Clean Power Plan was applied to a model used for daily trading strategies to show the impact of wholesale power markets. The real implications of the Clean Power Plan are found in the details and not the overall cost and benefits impact.

This session will explore how various wholesale markets will be impacted and how individual states will have vast differences in impacts to:

  • Wholesale and retail electricity rates
  • Renewable and DSM penetrations impacts
  • Expected Carbon Prices
  • Political fallout

David Bellman, Founder & Principal, All Energy Consulting, LLC

2:00 - 2:45 p.m. :: The Utility's Role

Utilities and merchant generation owners will be on the front lines of the EPA rules and ultimately responsible for complying with mandates. Should they wait for their public utility commissions and the electricity markets to tell them what to do, or should they play an early and active role in planning with the state(s) and other jurisdictions on how they meet the EPA timetable? Other considerations they must evaluate and prepare supporting documentation in response to include:

  • How to recover costs on stranded assets like early retired coal plants
  • What generation/transmission assets will be needed or possible to replace lost coal-fired generation
  • How the costs of new assets will be recovered • What role renewables will need to play
  • What analysis and planning will be needed to prepare for the required shift in generation fuels and technology
  • How likely they are to be caught between conflicting regulatory mandates for reliability and CO2 compliance

Kenan Ogelman, Director of Energy Market Policy, CPS Energy

2:45 - 3:00 p.m. :: Afternoon Break

3:00 - 4:00 p.m. :: The Grid Operators' and Balancing Authorities' Role

Regional transmission operators (RTOs), independent system operators (ISOs) and regional entities (REs) are tasked with maintaining reliability and resource adequacy in their service territories and many of the these organizations are already on record with concerns about the CPP and MATS impacts This is especially true for regions that rely on coal for the bulk of their generation. With the onus on each state to develop its compliance plan and the threat of an EPA-imposed plan should a state fail to submit a plan, along with the reliability mandates of FERC and NERC, these balancing authorities face considerable challenges for future resource adequacy planning. In this session representatives from RTO/ISO/RE organizations will explore the reliability challenges and their potential responses along with discussing:

  • The ISO/RTO Council's reliability safety valve concept
  • State's consultation on compliance with the operator/balancing authority
  • Can RTOs/ISOs act as a regional compliance clearinghouse for the states?
  • EPA's interim goal planning challenges

John Lawhorn, Director, Regulatory and Economic Studies, MISO

4:00 - 5:00 p.m. :: FERC's Role

The Federal Energy Regulatory Commission (FERC) is charged with regulating transmission and wholesale electricity sales in interstate commerce, the transportation and sale of natural gas for resale in interstate commerce, and protecting the reliability of the high voltage interstate electricity transmission system. As these systems are interrelated and will only become more so under the CPP, understanding FERC's role is vital for reliability planning undertaken by power producers, states and balancing authorities. This session will consider the important consequences of the EPA regulations as they relate to these important FERC's roles with regard to:

  • Oversight
  • Conflict with other policies
  • Enforcement
  • Interaction with the Clean Power Plan

Devin Hartman, Analyst, Federal Regulatory Energy Commission (FERC)

5:00 p.m. :: Conference Adjourns

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