By Tom Kleckner

Hurricanes Harvey and Irma were very much on the minds of lawmakers and electric industry regulators last week during a House Energy and Commerce subcommittee hearing on the grid’s reliability and resilience.

The subcommittee’s Sept. 14 hearing, “Defining Reliability in a Transforming Electricity Industry,” was delayed two days following Irma’s landfall in Florida and then shortened to 45 minutes so members — who had recently approved a hurricane aid package — could take a series of roll-call votes.

FERC acting Chairman Neil Chatterjee and his fellow witnesses, NERC CEO Gerry Cauley and Patricia Hoffman, the Department of Energy’s acting assistant secretary for the Office of Electricity, used their opening comments to detail the steps their organizations have taken in the restoration efforts in Texas, Florida and other southern states.

“It’s times like these that … remind us how important the reliability and resilience of the electric grid is in our lives,” said Chatterjee. “Rebuilding from these storms is going to take time. It’s important as we confront these storms and the impact they’ve had on the grid that we ensure … we can bounce back from these types of events.”

‘Modern, Dramatic Response’

While the subcommittee’s Republicans focused their questions on threats to reliability they said were posed by the changing generation mix, Florida Democrat Kathy Castor challenged her colleagues and the industry to respond to the threats posed by “the changing climate.”

Castor said a “modern, dramatic response” was needed in the face of increasingly large and violent weather events.

“These disasters are very expensive, and it is time to make a dramatic investment in a modern grid, something that is more resilient and preserves the needs of our citizens in a better way,” she said. “We have some of the brightest minds in America, and we need to put them to work, and we need to put the technology to work, whether that’s burying lines we haven’t invested in before or a greater distributed energy grid or building renewables over time.”

Castor questioned DOE’s Hoffman regarding how the agency could invest in a modern grid under significant budget cuts. The department submitted a fiscal year 2018 request of $28 billion in funding, 5.4% below its FY16 levels — including a 42% cut to the Office of Electricity Delivery and Energy Reliability.

“We simply can’t cut our way and think we can address these costs and the challenges ahead,” Castor said. “I hear the [DOE] wants to be proactive on this, but I don’t know how we are going to do that when we see such tremendous cuts by the Trump administration in resilience, in research. We have to re-think that.”

“The administration has focused its FY18 budget on early research,” Hoffman responded. “We are concentrating on maximizing the effectiveness of work at the Department of Energy. We did provide a budget to Congress for FY18. We look forward to what Congress will provide back on what the department will implement as part of our FY18 appropriations.”

“You’re right. It’s back on Congress … and I hope [Congress is] listening and understanding the huge cost if we do not address this,” Castor shot back. “Look at what we’re facing already … emergency aid packages, flood insurance, rising property insurance, rising local taxes because local governments are having to raise taxes to harden [infrastructure], the loss of life. Let’s do more working together.”

Castor found a friendlier ear in Cauley, who said the 50 largest events to affect the grid over the last six years have all been weather related. That has led NERC to “focus on resiliency as a priority going forward,” he said.

Responding to a question from subcommittee ranking member Bobby Rush (D-Ill.), Cauley said climate change is “outside our organization” but agreed there appears to be “an increase in magnitude and severity of events, flooding and storms.”

“We have to think about that in designing our systems and how we prepare for more extremes than we have seen historically,” Cauley said. “Florida Power & Light invested $3 billion in hardening its infrastructure. The equipment that was hardened performed significantly better.”

Script Ripped Up

The hurricanes threatened to steal the script from those who had hoped the hearing on resilience — the fifth in the committee’s “Powering America” series — would provide support for struggling coal and nuclear generators.

When it was their turn to ask questions, North Dakota Republican Kevin Cramer drilled into what he called the importance of coal generation as baseload power, while Texas Republican Joe Barton questioned whether reliability is threatened when generation is predominately renewable.

“I think the technology is there today [to ensure reliability], but it requires a lot of coordination,” Cauley answered Barton.

Chatterjee, who reminded the legislators that FERC is fuel-neutral, referred to Democratic FERC nominee Richard Glick’s confirmation hearing testimony, in which Glick said that FERC and DOE should closely monitor retirements of coal and nuclear baseload generation. (See McIntyre to Senate: ‘FERC does not Pick Fuels’.)

“I would echo those comments,” Chatterjee told Cramer. “We are going to closely watch and monitor whether or not, in fact, transitions in the grid do lead to threats to reliability and resilience, and where we would need to take steps to make sure it is met.”

Cramer asked Chatterjee how the commission will react to Illinois and New York, which are providing subsidies to preserve struggling nuclear generators, and whether the future will be “regulation by litigation.”

“I believe in states’ rights, and it is their prerogative to determine the sources of generation in their generation mix,” Chatterjee said. “When it does affect interstate commerce and potentially does have threats to reliability, FERC does have the authority to weigh in there.”

Virginia Republican Morgan Griffith, facing a ticking clock, reserved one question for Chatterjee. Griffith asked how high a priority the commission is placing on ensuring wholesale markets properly compensate the existing baseload fleet for its reliability services.

“We can walk and chew gum at the same time,” Chatterjee assured Griffith, alluding to the backlog of orders that accumulated during FERC’s six months without a quorum. “I’d say [it’s] a high priority.”

“We face a period of rapid change in the electric industry … this transition is altering our understanding of baseload power and how generating resources are dispatched,” Cauley said, citing cheap natural gas, technological advances, public policy and customer preferences as causes.

“With the appropriate policies, careful planning and strong actions, I’m confident the electricity sector will continue to accommodate these changes and enhance reliability and resilience,” he said. “Even with the changes that are already underway, the bulk power system remains highly reliable and resilient, and shows improved performance each year.”

Cauley called for ensuring reliable gas supplies as the industry becomes “increasingly dependent on natural gas” and said all generating resources should be able to support “essential reliability services.”

“Markets should incent and require all resources … and ensure those resources will respond in both normal and extreme conditions,” he said.