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POLITICS: PennAve

Lawmakers worry about grid reliability as new regulations near

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Lawmakers in both chambers are raising alarms about a January cold snap that brought parts of the Mid-Atlantic perilously close to a major blackout.

The polar vortex that swept through the country early last month pushed the PJM Interconnection, a regulatory entity that covers a swath of the Midwest, Appalachia and the Mid-Atlantic, to the brink of collapse. Some electric utilities and lawmakers argue that a slate of scheduled retirements of coal-fired power plants next summer to comply with a new federal rule would lead to a breakdown in a future extreme weather event.

"When I heard last night how critically close it was to the whole system coming down -- I don't think anyone realizes how critical this is. I mean, do you imagine how many people would have died? It's just unbelievable," Sen. Joe Manchin, D-W.Va., told reporters this week at an event in Washington. "We would have lost a lot of people."

At issue is an Environmental Protection Agency rule that tightens emissions standards for sulfur dioxide and fine particulate matter that have been known to cause heart and respiratory damage. The rule goes into effect in mid-April 2015, and would force the shutdown of a number of older, dirtier "peaking" plants that utilities fire up when demand is especially high.

But American Electric Power, the nation's most coal-dependent utility, said that 89 percent of its generators scheduled for shutdown beginning in May 2015 were running to keep the lights on during the early January cold snap.

That's caught the attention of Republicans and Democrats in both chambers.

Rep. Ed Whitfield, R-Ky., the chairman of the House Energy and Commerce Subcommittee on Energy and Power, told the Washington Examiner that his panel is ramping up discussions that could lead to a number of hearings on the subject.

"I think that it gives us all pause to think about President Obama's rush to renewable energy and making it more difficult to utilize coal. I think that this is another reason that we need to give more thought to it," he said in an interview.

"We've been yelling at the rooftop trying to bring this to the attention of people. But frequently, until you have an emergency people aren't paying attention to it," he added.

But PJM has argued that it will be able to withstand another extreme event, even with the anticipated coal retirements. It knows a significant amount of natural gas-fired generation is coming online to replace coal.

And it is most likely going to expand its year-round "demand response" programs, which require utility customers to ramp down power use during peak demand in exchange for a rebate. Currently, only summer programs face compulsory curtailments.

"It seems likely that we would be able to meet that kind of demand again," said Ray Dotter, a PJM spokesman.

But American Electric Power opted out of a scheme that allows PJM to plug its supply gaps with power from elsewhere on the grid. It did so with the understanding that it's responsible for satisfying its customers' needs — but it isn't sure it will be able to manage another polar vortex type of scenario beyond May 2015.

"There are concerns about peak demand period — like the ones we experienced in January," spokeswoman Melissa McHenry said.

The utility is building new gas-fired generation to replace retiring coal-fueled facilities in PJM states where it operates as a regulated monopoly. But in states with competition between utilities — such as Ohio — wholesale natural gas prices are too low to justify building new natural gas generators because the utility assumes all the risk, McHenry said.

Sen. Lisa Murkowski, R-Alaska, the top Republican on the Senate Energy and Natural Resources Committee, said those economics -- in the face of new federal regulations -- have given her pause.

"That's the alarm I'm trying to send. If people expect the lights to go on and all to be fine, well and good, we need to make sure that the policies that are being implemented are not going to be counterproductive to the goal of reliability in our electric grid," she said this week at a Washington conference.

Some logistical and regulatory hurdles have American Electric Power worried about its ability to respond to another extreme event, McHenry said.

The change to demand-response programs will certainly help, McHenry said, as she noted that was a way American Electric Power's system was able to bend without breaking last month.

Another concern is the way space on natural gas pipelines is scheduled. Pipeline capacity is lacking in the United States to meet the influx of new gas-fired generation, and utilities will often need to secure a spot a day ahead of time if they know they will need extra supply. For peaking plants, paying year-round to have access to that capacity is uneconomical.

McHenry said it's possible the Federal Energy Regulatory Commission will address the issue soon, which she said is vital.

"It is a regulatory issue. So we're not saying it can't be fixed — we're saying it has to be fixed," she said.

Dotter agreed, as he said the growing reliance on natural gas in the utility sector has brought it to the point where "there is a change that's going to need to occur between the two industries in how those gas pipelines are built and operated."

But Dotter also said more coal wouldn't have necessarily solved the problem during the polar vortex.

Of the 10 highest days of electricity demand in PJM history, eight came during the polar vortex -- including the new record-setter. But about half of the generation that went offline was coal-fired, as it was simply too cold to start those facilities.

"There was also a lot — in fact more — coal-fired that wasn't available. From our perspective, it's all generation," he said. "You can point to gas, but you can also point to other fuels."

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