By Rich Heidorn Jr.

ATLANTA — FERC Commissioner Cheryl LaFleur and several stakeholders expressed concern Tuesday that “fuel war” partisans could weaponize NERC’s coming analysis on the impact of a dramatic increase in coal and nuclear plant retirements.

The comments came at the quarterly meeting of NERC’s Member Representatives Committee (MRC), which received a briefing on the draft report from John Moura, NERC’s director of reliability assessment and system analysis. Moura said NERC plans to circulate embargoed copies of the report to the MRC shortly, with the final report submitted to the MRC and NERC Board of Trustees Nov. 27 and a public release in mid-December.

But based on the comments at Tuesday’s meeting, the analysis’ release may be delayed as stakeholders debate ways to prevent its findings from being taken out of context.

NERC Board Chair Roy Thilly said the assessment is “the most sensitive” NERC has performed in his seven-plus years on the board and promised the board won’t release it “until we’re comfortable” with it. We have to be “very, very careful about enabling quotes out of context,” he said.

Moura emphasized the analysis was a “stress test” intended to push the system to its breaking point, not a projection of what is likely to happen. It found that retiring 30% of coal generation remaining after the 46 GW of announced retirements and 45% of nuclear after the shutdown of the 10 GW announced would result in seven of 10 regions falling below their reserve margins, including PJM, MISO and SPP.

‘Scare Tactic-ish’

But LaFleur said the scenarios — based on an Energy Information Administration identification of units facing financial stress — were “scare tactic-ish.”

“The primary thing that makes generation retire is new generation … that’s what’s pushing this to happen,” she said.

“If there’s a specific issue, like frequency response or inverter issues or lack of black start or something else, let’s jump right on it, but I want to be sure that we don’t make an issue by the way we model it.”

The study is “so macro and worst-case it almost overwhelms the specific solutions.”

John Hughes, CEO of the Electric Consumers Resource Council (ELCON), which represents industrial customers, was even more blunt, calling the scenarios “fiction.”

“Should NERC be issuing fiction, especially at this time, with the conspiracy within the industry to try to do a second round of stranded-costs recovery of generation that should have been retired years ago?” he asked. “So, this is the battle that NERC is falling into. Any caveat or nuance it puts in the study will be missed by politicians and newspapers. They will take this study and run with it and make a fool out of this organization.”

Thilly lamented that S&P Global Market Intelligence published a story Oct. 31 based on a leaked “very early” draft of the analysis, dated Sept. 5, saying the disclosure “really undercuts our process.”

The story was headlined “Draft NERC report: Power outages possible if coal, nuclear plants close rapidly.”

NERC officials said the draft included even more extreme scenarios — increasing coal retirements to 60% and nuclear to 75% — that have since been eliminated because they did not materially impact the results.

Two Challenges

Moura agreed the results should not be sensationalized.

“I can certainly … understand the difficulties of telling this stress test scenario story without getting the general public and industry and policymakers thinking that the sky is falling. It’s certainly not. There’s a lot of processes and backstops available both at the state level, at the market level and even at the federal level to ensure reliability.”

He said the analysis identified two challenges, including ensuring new transmission where needed to address voltage stability and thermal violations resulting from shifts in generation locations.

The second challenge is managing the “end state” after the transition — the ability to respond to extreme conditions such as the polar vortex and fuel disruptions. The latter could mandate new gas pipelines, he said.

He noted Texas got through last summer without reliability problems despite losing 4,000 MW of coal-fired generation in spring with only a few months’ notice.

Moura defended the use of the EIA expanded retirement scenarios, saying such rapid shutdowns could result from new federal environmental policies or plant owner bankruptcies. “It helps us understand the worst-case scenario,” he said.

“We certainly don’t see this as the future,” Moura added. “It’s an engineering study to understand … what the bookends are.”

Steve Naumann, vice president of transmission and NERC policy for Exelon, the nation’s largest nuclear generator, said NERC should not take any action to block dissemination of the analysis. “Why wouldn’t you want that information?” he asked.

Oncor Vice President of Regulatory Affairs Liz Jones, representing the Texas Reliability Entity, said the report should stick to “independently observable fact” and avoid opinions and projections, which she said “have the potential to be much more problematic.”

“The core recommendation here is ‘manage it,’” said NERC CEO Jim Robb, adding the industry needs to ensure capacity markets and reliability-must-run generators are performing as intended to ensure reliability. NERC’s role should be the “conscience of the industry” and avoid the politics, he added at Wednesday’s quarterly Board of Trustees meeting.

“While it is possible for coal and nuclear retirements to exceed the current announcements and long-term industry outlooks, any such acceleration would also have feedback effects on power and natural gas prices that would tend to slow down any further retirements,” Brattle Group analyst Metin Celebi said in an email Wednesday. “With additional retirements, wholesale energy prices would increase due to lower expected reserve margins and more expensive resources setting the power prices, and natural gas prices would also increase due to an increase in the dispatch of natural gas plants. … The increase in power and gas prices would improve the economic viability of the remaining coal and nuclear plants at risk for retirement, hence acting as a brake on further retirements.”

‘Resilience’ is Part of the Job

In a related matter, the board accepted a report it requested from the Reliability Issues Steering Committee (RISC) in response to the Department of Energy’s August 2017 recommendation that NERC consider adding resilience to its mission. (See Perry Grid Study Seeks to Aid Coal, Nuclear Generation.)

The committee’s conclusion: “Resilience has consistently been, and should continue to be, a central component of NERC’s mission,” the report said.

The committee said the National Infrastructure Advisory Council’s guide for establishing critical infrastructure goals is “an appropriate framework for resilience as refined by the RISC and further informed by NERC’s FERC-filed definition of what constitutes the [adequate level of resilience].”

The report mapped how NERC’s current activities and standards support resilience and said no major changes were required. It did recommend that the organization expand reliability assessments to develop a model or metrics to measure resilience and energy security.

Groups that responded to NERC’s request for comment on the report generally agreed that resilience has been central to the organization’s work.

“There is ample evidence that the concern regarding ‘resilience’ is politically motivated, and we urge NERC to be sensible and stay the course,” ELCON said. “There is no compelling need for NERC to take any further action related to the bulk electric system. NERC should consider helping to elevate the discussion related to distribution system resilience.”

Editor’s Note: A previous version of this story incorrectly reported that S&P Global’s story was published Sept. 5. S&P had obtained a draft of NERC’s report that was dated Sept. 5. S&P’s story was published Oct. 31.