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Top Federal Energy Regulator Sees Mounting Challenges for US Power Grids

·6 min read

(Bloomberg) -- Allison Clements, a member of the Federal Energy Regulatory Commission, says the US will face increasingly stressed power grids and high energy costs until it creates a long-term plan to diversify fuel sources and better withstand extreme weather caused by climate change.

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The comment was part of an hourlong interview Monday with Bloomberg News, during which Clements was asked about her agency’s effort to ensure the flow of energy in the face of domestic and global pressures. FERC oversees interstate wholesale power markets, interstate natural gas pipelines and liquefied natural gas terminals.

The conversation covered infrastructure, climate change, global markets and the energy crisis in New England, a region struggling to meet demand, among other topics. Answers have been edited for length and clarity.

Q: You talk about climate change at every monthly FERC meeting and the agency’s mission to ensuring just and reasonable rates. Can FERC take any action?

When I speak about climate change, it’s because it’s a topic that cannot be avoided. The way that climate change comes into the commission’s obligation is that we’re in an unprecedented moment facing an increasing normalcy of extreme weather that our electricity system wasn’t designed to withstand. We have a rapid market-driven change in the resource mix, and those things are all related to climate change. The commission’s job is to effectively protect customers from a cost perspective and a reliability perspective into the future. One of the biggest challenges the commission faces is to modernize a system that withstands the challenges that climate change is imposing.

Q: We are seeing gas and futures prices trading at levels for next winter we haven’t seen in at least a decade, especially in New England. What can be done?

A: There’s three things you can do if you have overreliance on a fuel. You can find other sources of that fuel, diversify your fuel sources or you can reduce the demand. When you think about the near term, how do we get through this winter? All of the above, whatever you can do.

Q: We’ve seen a lot of gas companies these days blaming the energy crisis on how difficult it’s become to build new pipelines in this country, and specifically FERC for not making permitting easy. How do you respond to this criticism?

A: From the question of where are the blocks coming relative to the certification of new NSA gas pipelines, it historically hasn’t been in the commission. It’s still not within the commission. There’s a broad set of tools in the toolbox to provide low-cost electricity to customers. There are all sorts of stakeholders who would prefer some set of solutions other than building new interstate gas pipelines, and I think they challenge them in various ways at the state and federal levels that have had varying levels of success in slowing projects down.

Q: Winter Storm Uri left millions of people without power in Texas for days in February 2021. What was learned from that?

A: The lesson learned is that inter-regional transfer capability is a key component of a resilient electricity system. The commission has held a meeting with states and had this very conversation. Certainly the storm shocked a lot of us all around the country into making sure our systems are shored up for the challenge at hand. And the FERC/NERC report that came out is an important guide for regulators, for legislators and for industry stakeholders at all levels to try and provide a roadmap.

Q: Unlike the rest of the US, the Texas power grid is almost completely isolated from neighboring grids. Is having a separate power island a bad idea?

A: There’s opportunities when you are able to island yourself off from the power system, from a resilience perspective and the face of storms or extreme weather. But I think, generally, the more interconnected an electricity system is, if it’s bigger than the weather system that’s coming at it, you’re gonna be in better shape.

Q: With the rise of carbon capture and sequestration, what role will FERC play with regards to moving the greenhouse gas by pipeline?

A: There is a lot of emerging technologies that are forcing jurisdictional questions that we haven’t answered or that are certainly putting the Natural Gas Act to the test in terms of where its boundaries fall. It’s a place where we have a lot of interest. The industry is coming in in a very productive fashion to talk with us about it and, and we will continue to engage with them in a way that can be helpful, should Congress call on us to provide a perspective.

Q: What do you think about the idea of building a network of massive power lines across the country to move renewables in the name of national interest? How does that fit into FERC’s work with state officials on solving transmission roadblocks?

A: The lowest-cost path to net-zero economy by 2050 involves a 60% expansion in high-voltage transmission by 2030 and another tripling by 2050. There is a national interest in some amount of interregional transmission capacity that provides not only space for cheap electrons to flow from wind and solar resource but also to connect regions across the country, to get at some of the resilience needs we’ve seen. The emerging consensus we’re seeing is that there is agreement there is a national need for significant transmission investment.

Q: Would you support using eminent domain to build long-haul transmission lines?

A: It’s a really hard question because, again, the development of all kinds of infrastructure influences people’s lives. It’s coming through your farm; it’s coming through your church parking lot. Whether or not it’s above ground or underground, it’s hard. There’s also a reality to the need. I am open to the idea that there’s a role for the federal government to play. The idea of setting up these conversations and trying to start rebuilding trust with the states is, to me, the starting point for getting to ‘yes.’

Q: Even though FERC now has authority to site using eminent domain, you want some guidance from Congress first?

A: It seems like it’s coming, so there’s no reason to get out ahead of it. Eminent Domain is one of the things under consideration for electric transmission in a more robust sense in the permitting discussions going on in the Senate and in Congress.

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