One of my key responsibilities is making sure that public power's voice is heard loud and clear in Washington, D.C.'s corridors of power. So I was glad to be invited to speak at the kick-off meeting for the second installment of the Quadrennial Energy Review (known to energy wonks as "Q-E-R" 1.2), hosted by the Department of Energy at the Capitol on Feb. 4, 2016.
The term "Quadrennial Energy Review" is somewhat of a misnomer, as it implies that such a review would happen every four years. The first installment of the QER, which looked at our entire energy infrastructure, was actually released less than a year ago — in April 2015. However, the White House and DOE have recognized that changes in the energy industry are coming way too fast for reviews to only be done every four years. So the DOE is doing the QER in four annual installments, to provide policy makers with a deeper analysis of the complex elements that make up the country's energy system.
The second installment of QER is focused specifically on the electricity sector, from generation to end use. I participated on a panel at the Feb. 4 meeting that addressed how the country can plan, build, maintain, and operate the appropriate amount of bulk power generation and transmission for future needs. I told my fellow panelists and audience members that I felt like I had been asked to appear in the opening episode of Season Two of the PBS hit series, Downton Abbey — "Energy Edition." And I was only half-joking.
It was a good opportunity to reiterate some basic public power views on our industry, and I took it, saying (among other things) that
- Maintaining community-level decision-making on energy issues is of the utmost importance; increased federal regulation can have adverse impacts on public power by reducing choices and imposing new mandates, thus increasing costs.
- The federal government should assist the industry by supporting new technological advances, but should not be in the business of selecting favored business models or technologies.
- Not-for-profit public power utilities care about the "three-legged stool" — affordability, reliability, and environmental stewardship. If any one of those gets out of whack, customers suffer.
I also discussed three issues of importance to the public power community that I hope the QER's second installment can address — flaws in mandatory capacity markets in organized wholesale power markets, the potential impact of EPA's rule to curb carbon dioxide emissions under Section 111(d) of the Clean Air Act, and cyber and physical security.
Mandatory capacity markets operated by regional transmission organizations are increasingly showing that they are unable to support the development and maintenance of a lower carbon resource portfolio at a reasonable price. These markets were just not designed to support the optimal mix of resources to help us reduce carbon intensity, promote fuel diversity, provide ancillary services, and coordinate natural gas infrastructure with electric infrastructure — and they don't.
The EPA's final rule under section 111(d), a/k/a the Clean Power Plan, while a definite improvement over the proposed rule, still tries to do too much too fast for public power utilities and their customers in many states. The final rule, if implemented as EPA finalized it, has high potential to create stranded costs and curtail the remaining useful life of existing electric generating units, increase operating costs, add new infrastructure costs, and raise electricity bills for millions of consumers.
Because of these concerns, APPA has asked the U.S. Court of Appeals for the District of Columbia Circuit to review the rule. But every bit as important, on January 21, we submitted extensive comments to the EPA on its proposed federal plan and model trading rules. It's going to be extremely important to public power that any CPP trading regime actually work. We have to be able to maintain that three-legged stool of reliability, affordability, and environmental stewardship.
Finally, public power utilities are fully committed to enhancing their cyber and physical security. As part of our 3-year strategic plan, APPA is helping members develop an "all hazards" approach to security, disaster preparation, and response. While APPA supports the enhanced dialogue between the industry and federal government on security threats and potential responses, we do not support federal mandates at the distribution level.
I gave a shout out to APPA's government partners on cyber and physical security, especially DOE and DHS, and recognized the efforts of the North American Electric Reliability Corporation and the Electricity Information Sharing and Analysis Center. It will take all of us working together to address the threats we face.
Participating in the QER process is important for APPA — in fact, for all of public power. We will continue to take advantage of opportunities to put our views on the table as DOE takes the QER on the road — it is planning six regional meetings over the next few months.
The docket to file comments and relevant documents for the QER's "second season" is open from now until July 1, 2016. If you have anything you want to make sure APPA tells DOE, please let us know — email us at [email protected]."