Todd Snitchler is president and CEO of EPSA.
Reliable electric service is paramount and cannot be sacrificed for any policy preference. Two other important interests are affordability and emission reductions goals. Any one of those is a laudable priority, but first among equals is reliability.
Even as we enjoy an abundant supply of energy resources and increasingly advanced technology, a large portion of U.S. states are threatened this summer by “elevated risk for energy emergencies,” according to the latest report from the North American Electric Reliability Corporation (NERC). NERC’s warning should be a wake-up call for all of us who are responsible for ensuring that Americans have access to a reliable supply of electricity as we steer the nation through an historic energy transition. As multiple goals compete for our attention, we might be well served by a lesson from the film, “Valkyrie.”
In “Valkyrie,” Col. Claus von Stauffenberg attempted to balance several competing interests in trying to bring an end to World War II, each of which had real world consequences and required personal sacrifices. Those priorities were all important – his nation, his family and his own life – but he prioritized his nation above each of the others.
In many ways, energy policy must also confront competing interests that are similar in their importance – all are noble, well-intentioned and valuable to consumers. The challenge in energy policy is ensuring that we must prioritize reliability above all others – like Col. von Stauffenberg’s love of country, we must make it first among equal objectives.
Primarily, there are three competing energy policy interests that must remain in balance and be appropriately prioritized regardless of the policy priorities in question. Reliable electric service is paramount and cannot be sacrificed for any policy preference. Two other important interests are affordability and emission reductions goals. Any one of those is a laudable priority, but first among equals is reliability.
Growing evidence shows the catastrophic impacts of simply paying lip service to the importance of reliability rather than making it the top priority as other energy goals are pursued. In just the past year, in two very different sets of circumstances and geographic locations, Americans have suffered due to serious to outright tragic reliability events. These reliability disruptions occurred even though the two states impacted have very different approaches to resource procurement and differing policy priorities. Now is the time to undertake a realistic and laser-focused review of how to ensure those events are not repeated. We must also confirm that every step possible is taken to prevent them from occurring again or in other parts of the country.
So, what are the examples that raise questions about the focus on reliability? First, the winter storm in Texas this past February exposed several concerning issues, all of which undermined reliability in a cold weather situation. Policies that secured reduced emissions and kept costs among the lowest in the country failed to ensure that the ever more closely integrated natural gas and electric grid was properly prepared for the unexpected cold weather that ultimately resulted in days of power outages and more than 100 deaths. Simply saying that “the system is reliable” but not making the investments in infrastructure and putting policy in place to ensure the system worked, even if costs increased to achieve the goal, resulted in a tragic outcome in winter weather. Peoples’ health and safety are inextricably linked to reliable power, as was so vividly shown in Texas.
Second, last summer in California power was interrupted to customers due to an inability to secure sufficient resources to ensure that the system remained reliable in a hot weather scenario. Unfortunately, warnings have already been issued signaling that this summer will bring a similar or even more severe situation. The push to rapidly move to a zero-emission power grid – at the least, the portion of generation resources located in state – failed to account for the engineering limits of the system rapidly moving to a heavily solar- and wind- driven resource mix and actively retiring other resources, including nuclear and natural gas-fired units which can deliver power when renewables and battery storage are unavailable.
There are some commonalities in Texas and California, and some differences as well. Even though they had different ambitions (lowering costs vs. reducing emissions), the policies implemented in each state got the same bad operational outcome – electric service was interrupted.
NERC’s 2021 Summer Reliability Assessment voices concern that both Texas and California continue to face serious reliability threats. In Texas, NERC notes that “with a significant portion of electricity supply coming from wind generation, operators must have sufficient flexible resources to cover periods of low-wind output.” And in California, the grid is at risk of energy emergencies not only during above-normal scenarios, but even during times of normal peak demand. NERC also raises the alarm for the entire Western Interconnection, MISO and New England.
Just and reasonable rates paid by consumers should ensure reliable delivery of power. The costs of power interruption in the terms of lives lost, property damage, and lost productivity are higher by orders of magnitude than properly balancing the costs, reliability, and emission reduction policy goals. Rather than continuing to crow about ribbon cuttings and policy outcomes that may be achieved 30 years in the future, we must place focused attention on the here and now to achieve system reliability while striving to advance other policy goals, in that order.
Reliability is not at odds with competition. Well-designed competitive power markets governed by independent system operators can properly incentivize and plan to secure capacity needed to meet extreme demand. It is incumbent on grid and market operators to work with all participants to ensure that reliability does not fall victim to other competing priorities.
In no instance on record is there an example of a negative system impact from systems that prioritize reliability first, and then integrate other priorities. But when regulators and policymakers assume away reliability concerns, they jeopardize human health and safety – and that is not acceptable. Instead, now is the time for reality-based, practical approaches to ensure reliability during a period of dramatic transition in the energy space. The good news is that we can advance all three priorities – this is not a zero-sum game. As NERC President and CEO Jim Robb said, “This is not a call against the transition… but rather a plea for attention to the pace of change and the challenges created for system operators.” EPSA and our member companies are eager to bring solutions that strike the right balance, and we have submitted several workable policy proposals toward that end.
But we can’t simply wish reliable electric service into being – let alone actively drive out the very resources that ensure the reliability that allows innovative and transformational policy to emerge. A sustainable energy transition that moves our nation and economy forward must be built on a strong foundation that doesn’t lose sight of energy policy’s fundamental purpose: keeping the lights on.