There were approximately 10,000 energy projects in April designed to produce more than 2,000 gigawatts (GW) of collective power waiting for permits from federal and state agencies to connect to electric grids across the United States.
The problem is, that is nearly twice the collective electricity output of the 1,250 GW now being produced by all the nation’s power plants, most of which were built to generate power using fossil fuels.
Therefore, two bottlenecks are looming—more power is trying to squeeze into an inadequate grid and coal-fired plants are being retired faster than new plants using renewable energy sources such as wind and solar are being built to replace them.
“The United States is heading for a reliability crisis,” Federal Energy Regulatory Commission (FERC) Commissioner Mark Christie warned on May 4 in a hearing before the Senate Energy & Natural Resources Committee.
“I do not use the term ‘crisis’ for melodrama, but because it is an accurate description of what we are facing,” Christie said. “I think anyone would regard an increasing threat of system-wide, extensive power outages as a crisis.”
Committee chair Sen. Joe Manchin (D-W.V.) and ranking Republican Sen. John Barrasso (R-Wyo.) agreed, with both identifying the same culprit in an “impending, but avoidable, reliability crisis” that confronts the nation’s electricity grid.
The “premature fossil retirements” amid increasing demand for power are a result of President Joe Biden’s green energy initiatives in 2021’s Bipartisan Infrastructure Law (BIL) and 2022’s Inflation Reduction Act (IRA) that incentivize investments in renewable energy.
The incentives have proven effective in inducing investor interest—maybe too successful with projects being proposed and approved sooner than expected and faster than the grid’s transmission capacity is expanding.
The Biden administration is “trying to force a dramatic increase in electrical demand” through the BIL and IRA, Manchin said, which will foster disruptions in transmission as old plants are retired and new ones come online.
“We do have to address climate change but this transition is happening too fast,” he said, noting he and House Republicans have filed bills that address transmission. “I hope we can sit down and negotiate in good faith and put politics aside.”
Natural Gas Shunted Aside
Barrasso blasted the Biden administration for contributing to the pending energy transmission bottleneck by discouraging natural gas pipeline development, citing an April U.S. Energy Information Agency (EIA) report that documented the least amount of pipeline was built in 2022 than any time since such record-keeping began in 1995.
Without restoring “balance” in the nation’s energy equation that includes coal, natural gas, and oil, “energy prices will skyrocket, grid reliability will degrade, and families all across the country will suffer,” Barrasso said.
Christie was one of the four FERC commissioners to address the Senate committee during a hearing on the agency’s $520 million fiscal year 2024 budget request, but few questions posed by senators during the session directly addressed the proposed spending plan.
Under the Federal Power Act, Natural Gas Act, and Interstate Commerce Act, among other legislative and administrative actions, FERC is responsible for managing the nation’s electrical grid.
More than 5,200 megawatts (MW) of oil, coal, and nuclear power plant energy generation were “retired” between 2013 and 2022, and another 5,000 MW of coal- and oil-fired generation could be retiring in coming years, according to the U.S. Energy Information Agency (EIA).
Coal-fired plants that generate more than 200,568 MW of energy plan to shut down by 2029 because of “continued competition from natural gas and renewable resources” and higher operating costs associated with older, less efficient coal-fired generators, the EIA reported in November 2022.
It said an average of 9,450 MW of coal-fired electricity was retired annually between 2012 and 2021. U.S. coal-fired plant retirements totaled 11,778 MW of capacity in 2022. That trend is expected to continue at least through 2029 when, the EIA projects, 23 percent of the remaining 200,568 GW of coal-fired energy will go offline.
Michigan, Texas, Indiana, and Tennessee will see the most “coal-fired capacity retirements” through 2029, accounting for a combined 42 percent of energy generation in those four states that will need to be replaced.
Natural gas is also leaving the grid faster than it is being replaced. In November, FERC anticipated 107 units of “high-probability” natural gas units totaling 17,062 MW capacity would go online by September 2025. Over that same time span, however, 130 units totaling 17,489 MW of natural gas power will go offline.
By September 2025, FERC anticipates that the amount of electricity produced by renewable energies will grow from about a quarter of the nation’s power generation to one-third of “available, installed generating capacity.”
Utility-scale solar and wind generating capacity would expand from 17.37 percent of domestic capacity to 23.24 percent by September 2025, with solar and wind accounting for 11.23 percent and 12.01 percent, respectively, according to FERC.
While the sharp increase in FERC’s three-year forecast for wind and solar, coupled with coal-fired plant retirements and the “apparent peaking of natural gas” as a source of electrical generation applauded by renewable energy proponents, even those who support the shift to renewables are raising alarm about the timing of a transition that is happening faster than government capacity to plan and regulate.
FERC $520 Million Budget Not On Agenda
Much of the hearing focused on interim FERC Chair Willie Phillips, named by Biden in January to succeed Richard Glick, a Democrat criticized by Senate Republicans and Manchin for imposing new guidelines on natural gas projects and incorporating pipeline emissions in permitting reviews.
Machin addressed the pile-on of new greenhouse gas regulations imposed by the Biden administration as “simply staggering” during the May 4 hearing.
Biden originally nominated Glick for another term but in November Manchin said he was “uncomfortable” with the renomination and would not hold a required confirmation hearing before his committee.
Machin endorsed Phillips as chair in a Jan. 3 statement that called him “a supremely qualified and reasonable person” who “understands the need to balance affordability and reliability.”
Barrasso said he also backs Phillips’s confirmation as FERC chair, praising him for “resetting the agenda to bring forward discussions for action” with an “emphasis on energy availability and affordability.”
While he doesn’t always agree with him, Barrasso told Phillips, “Under your leadership, the commission has made great progress since you took over just a couple of months ago.”
Phillips, who was District of Columbia Public Service Commission Chair from 2018 to 2021, has served as a FERC commissioner since December 2021.
A regulatory attorney, he has been criticized by Public Citizen and other consumer groups as too accommodating to utilities, primarily from his stint as counsel for the North American Electric Reliability Corp, a public-private entity that assists FERC in grid development.
With Phillips serving as chair, the five-seat FERC commission is down one member and evenly split between Democrats and Republicans. A fifth commission nominee has not been put forward by the administration.
Phillips and Allison Clements are the commission’s two Democrats with Christie and James Danly as its two Republicans. All addressed the Senate panel on May 4.
The Electric Power Supply Association and Interstate Natural Gas Association of America are among industry groups raising fears that the 2–2 deadlock can delay projects, including the transmission of zero-emissions electricity into the utility grid, efforts to bolster climate-weather resiliency, and the warding off of cyber-attacks.
New Chair, New FERC Priorities
Phillips said one of the first things he did as FERC chair was clearly reiterate the agency’s reason for existing.
“It is our responsibility to ensure that rates for the wholesale sale and transmission of electricity, as well as the transportation of oil and natural gas by pipeline, in interstate commerce are just and reasonable,” he said in his testimony.
FERC is also responsible for permitting and regulating energy infrastructure—plants and transmission lines—and that includes “interstate natural gas pipelines” and “facilities for exporting or importing Liquified Natural Gas.”
Phillips said that after clarifying FERC’s mission, he sent forth three priorities: reliability, electric transmission, and environmental justice.
“I am happy to report that, in a few short months, we have made substantial progress on all three fronts,” he told the panel.
Reliability “is—and always must be—job number one” for the commission when the nation faces “unprecedented challenges to the grid’s reliability,” Phillips said.
“Foreign and domestic actors are testing our cyber defenses every day. Physical threats to the grid are on the rise. And extreme weather of all kinds is threatening power to customers across the country,” he said.
Among the steps in addressing cyber security is the January finalization of a rule that requires the North American Electric Reliability Corporation (NERC) to develop “enhanced cybersecurity standards,” Phillips said.
NERC, a not-for-profit public-private regulatory entity provides FERC with reliability and security assessments of grid integration from Canada to northern Mexico.
In February, Phillips said, the FERC Commission updated and enhanced winter preparedness measures recommended by NERC “designed to help prevent a repeat of the grid impacts we saw” in 2021 winter storms, especially in Texas.
The commission in March approved new reliability standards to “further protect our electric system supply chain from hostile actors,” he said, adding in April it “issued yet another final rule,” this time implementing the requirement in [BIL] to establish incentives to induce cybersecurity investments.
“These actions represent the ‘blocking and tackling’ that is absolutely necessary to ensure that our electric grid remains secure, reliable, and resilient,” Phillips said.
FERC’s second priority under his leadership is transmission, he said.
Transmission “is, in itself, a reliability imperative,” Phillips said, calling transmission “the key that can unlock the potential of so many of the energy security measures” in the BIL and IRA.
Phillips said FERC has several “rule-making” priorities it wants to implement in the coming year to enhance transmission.
“First, my highest priority in the near term is to finalize a proposed rule that will greatly improve our processes for interconnecting new electric generating resources, reducing the time it takes to bring those resources online,” he said.
“In addition,” Phillips added, “we are working to finalize a second proposed rule on how to plan and pay for badly needed regional electric transmission facilities.”
A third proposed transmission-related rule would provide the FERC commission with the “backstop siting authority” accorded it under the BIL.
Philips said his third priority as FERC chair is environmental justice.
“For me, this is personal,” he told the Senate panel, recalling growing up in “an environmental justice community in Alabama” where he experienced “firsthand what it means for a community to bear more than its fair share of pollution and the other costs of industrial development.”
He balanced that experience with recognizing “the benefits that investment can provide to historically underserved communities” in the form of jobs, tax revenues, and the community benefits of economic development.
“Having seen both sides, it is my goal as chairman to do all that we reasonably can to ensure that environmental justice communities affected by the commission’s decisions do not bear too great a share of the burdens or too small a share of the benefits that new energy infrastructure can provide,” Phillips said.
