FERC Issues Staff White Paper on Guidance Principles for Clean Power Plan Modeling; Suggests Stakeholder Engagement to Consider Reliability Issues

On January 19, 2016, the Federal Energy Regulatory Commission (“FERC”) issued a Staff White Paper[1] outlining four guiding principles to assist transmission planning entities – including regional transmission organizations (“RTOs”), independent system operators (“ISOs”) and electric utilities – in analyzing the Clean Power Plan (“CPP”) promulgated by the U.S. Environmental Protection Agency (“EPA”).[2]  The CPP requires each state to demonstrate that it has considered electric system reliability issues in developing its state emissions reduction plan.  The EPA explained that one particularly effective way for states to make such a demonstration is by consulting with the relevant RTO, ISO, or other transmission planning entities and documenting this consultation process in their state plans.

Although the CPP has required states to consider reliability issues and encouraged consultation with transmission planning entities, the CPP provides states with significant flexibility in determining how to meet their goals. Given the potential for state-by-state variations in compliance approaches, transmission planning entities face the complicated task of evaluating and modeling the interaction of state compliance plans with wholesale energy markets that span multiple states as well studying how the compliance plans of neighboring states will affect the interconnected transmission grid that is not bound by a single state.  In response to these challenges, FERC Staff developed the White Paper to guide transmission planning entities as they conduct analyses of the impacts of state compliance plans.  The White Paper’s four guiding principles address (1) transparency and stakeholder engagement; (2) study methodology and interactions between studies; (3) study inputs, sensitivities and probabilistic analysis; and (4) tools and techniques.

Consistent with the principles of openness and transparency FERC has adopted as part of other regional transmission planning reforms, FERC Staff recommends a transparent development process that allows stakeholder input on the important aspects of the CPP planning process. The White Paper encourages stakeholder review of study inputs, modeling techniques, base case content, and study results to not only improve modeling practices within a region, but also to improve modeling coordination efforts across neighboring planning regions.  With respect to study methodology, the White Paper recommends incorporating changes to current study methodologies to allow transmission planning entities to more effectively assess the impact of the CPP rather than using static assumptions.  The White Paper encourages the use of study inputs that account for uncertainty and test for sensitivity and notes that stakeholder feedback will be helpful in selecting such inputs.  The White Paper explains that valuing study inputs is an inherently subjective process, and stakeholder input will ensure reasonable assumptions and inputs are incorporated into the study process.  Finally, the White Paper recommends that transmission planning entities adopt specialized software tools and modeling data to thoroughly evaluate the complex interactions among recent changes in the electric grid, such as increased renewable penetration and reliance on natural gas-fired generation.

In addition to Staff’s guiding principles, the White Paper cites several different types of studies currently used in the transmission planning process that could be useful in assessing the impacts of the CPP and states’ associated compliance plans. These studies include resource adequacy planning; production cost; integrated gas-electric systems simulations; powerflow and transient stability analysis; and frequency response.

Assuming transmission planning entities heed the guiding principles set out in the White Paper, the review processes set up for transmission planning entities to model and evaluate proposed state compliance plans may be an effective avenue for interested parties to engage in the development of the state compliance plans and suggest changes.

The White Paper is available for review here.


Footnotes:

[1] Staff White Paper on Guidance Principles for Clean Power Plan Modeling, Docket No. AD16-14-000 (issued Jan. 19, 2016) (“White Paper”).

[2] The CPP was issued on August 3, 2015.  You can read more about the CPP and its regional impact across the United States here.

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