FERC Federal Energy Regulatory Commission : Staff Issues White Paper on Guidance Principles for Clean Power Plan Modeling

Staff White Paper on Guidance Principles for Clean Power Plan Modeling Docket No. AD16-14-000 Staff White Paper on Guidance Principles for Clean Power Plan Modeling

Docket No. AD16-14-000

1. Executive Summary

   On August 3, 2015, the U.S. Environmental Protection Agency (EPA) issued the Clean Power Plan (CPP)1under Clean Air Act 111(d). The CPP limits carbon dioxide emissions from existing fossil fuel-fired electric power plants by providing state specific goals for carbon dioxide emissions from affected electric generating units. As part of the CPP, EPA considered the potential impacts of the

   CPP on electric system reliability. Specifically, the CPP requires each state to demonstrate in its final state plan submittal that it has considered reliability issues in developing its plan.2Separately, on August 3, 2015, EPA, the U.S. Department of Energy (DOE) and the Commission agreed to coordinate certain activities to help ensure continued reliable electricity generation and transmission during the implementation of the CPP.3

   
   

   While the CPP assigns no direct role to the Commission, it is possible that the Commission may be called upon, through the EPA-DOE-FERC Coordination Document4 or for other reasons, to address concerns about reliability as the CPP is implemented. In that case, the use of appropriate modeling tools and techniques will be helpful to the Commission in carrying out its responsibilities for reliability.5

   This white paper identifies four guiding principles that may assist transmission planning entities, which may include regional transmission

   
   

   1 See Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, Docket No. EPA-HQ-OAR-2013- 0602, at 1104 (2015) (CPP). 2 Id. at 1118-1119.

   3 EPA-DOE-FERC Coordination on Implementation of the Clean Power Plan (Aug. 3, 2015), http://www.ferc.gov/media/headlines/2015/CPP-EPA-DOE- FERC.pdf.

   4 Id. 5 The Commission's jurisdiction and its expertise with respect to reliability is limited to the Bulk Power System.

   organizations (RTOs), independent system operators (ISOs), electric utilities, or other interested stakeholders, in conducting effective analysis of the CPP and associated state plans, federal plans or multi-state plans (compliance plans). These guiding principles address four areas: (1) transparency and stakeholder engagement; (2) study methodology and interactions between studies; (3) study inputs, sensitivities and probabilistic analysis; and (4) tools and techniques.

   Incorporating these guiding principles in the modeling of the CPP compliance plans is one way to promote a robust analysis of the reliability impacts of the CPP. The guiding principles discussed herein may form the basis for additional action by staff, such as industry outreach or technical conferences, or future action by the Commission.

2. Background

   On August 3, 2015, the EPA issued the Clean Power Plan to limit carbon dioxide emissions from existing fossil fuel-fired electric power plants. In the final rule, EPA provides state specific goals for carbon dioxide emissions from affected electric generating units. Each state is required to meet interim emissions goals from 2022 to 2029 and a final goal starting in 2030.

   In formulating the final rule, EPA considered input from many electric industry stakeholders, including comments from the technical conferences hosted by the Commission in early 2015. As a result of these comments, the final rule provides ways to assess the potential impacts of the CPP on electric system reliability. Specifically, the CPP requires each state to demonstrate in its state plan that it has considered reliability issues in developing its plan.6EPA states that one particularly effective way that states could make this demonstration is by consulting with the relevant RTO, ISO, or other planning authorities as they develop their plans and documenting this consultation process in their state plans.7If a state chooses to consider reliability through consultation with an ISO/RTO or other planning authority, the EPA recommends that the state request that the planning authority review the state plan at least once during the plan development stage and provide its assessment of any reliability implication of the plan.8

   In the CPP, EPA notes that, in June 2015, M.J. Bradley & Associates issued a report that enumerated a set of useful guiding principles for studying and

   
   

   
   

   6 Id. 7 Id. 8 Id. evaluating the reliability impacts of the final rule.9 EPA states that the report enumerated six principles: (1) a study should be transparent about the assumptions and data used; (2) a study should accurately reflect the existing status of the grid in its modeling assumptions; (3) a study should clearly identify the base case and not confuse what will happen as a result of the final rule with what would have happened anyway; (4) where possible, a study should contain sensitivities and probabilities as they are looking into the future which is necessarily uncertain; (5) a study should reflect the flexibility provided to states to allow them to design compliance approaches to maximize reliability; and (6) a study should provide realistic and reliability-focused results. EPA stated that these principles are helpful to keep in mind when reviewing recent studies on CPP implementation.
3. Purpose of Staff White Paper

   Effectively evaluating the potential reliability impacts of the CPP associated with the development of compliance plans presents a number of challenges for transmission planning entities. Although the CPP allows states significant flexibility in determining how to meet state goals and this flexibility can be beneficial, it may introduce additional uncertainty and complexity into transmission planning studies. Because all states in the continental United States are required to comply with the CPP, state-by-state variations in compliance approaches may add additional uncertainty and complexity, particularly for transmission planning entities that cover multiple states or states with multiple transmission planning entities. Further, the use of inconsistent models, or inconsistent modeling inputs, may suggest reliability problems where none exist, or may mask problems that do exist. If models and modeling inputs are not transparent, it will be difficult for stakeholders, state commissions, planning authorities or the Commission to identify, understand or address potential problems.

   Although effectively evaluating the impacts of the CPP may present challenges, these challenges may be reduced by using appropriate modeling tools and techniques. This white paper identifies four guiding principles that may assist transmission planning entities in conducting effective analysis of the CPP and associated compliance plans. This analysis could occur as part of established transmission planning processes or as part of a different process, such as the reliability review required as part of state plans. These guiding principles address four areas: (1) transparency and stakeholder engagement; (2) study methodology and interactions between studies; (3) study inputs, sensitivities and probabilistic

   
   

   9 CPP at 1132-1133 (citing M.J. Bradley & Associates, Guiding Principles for Reliability Assessments Under EPA's Clean Power Plan (June 3, 2015), http://www.mjbradley.com/node/295 (Bradley Report)).

   analysis; and (4) tools and techniques. Implementation of these principles is one way to help transmission planning entities conduct robust analysis of the impacts of the CPP and associated compliance plans. The principles discussed below may form the basis for additional action by staff, such as industry outreach or technical conferences, or future action by the Commission.

   
   

4. Types of Studies

There are a number of different types of studies that could be useful to effectively assess the impacts of the CPP and associated compliance plans. Long- term transmission planning processes already involve a number of discrete studies that examine a variety of technical and economic factors, which could also be applied to analysis under the CPP. These studies can include, but are not limited to: resource adequacy, production cost, integrated gas-electric systems simulations, powerflow and transient stability analysis, and frequency response.

Resource adequacy planning generally examines the electric system's ability to provide adequate supply of generation to meet demand and maintain reserves to support generation outages. Resource adequacy planning studies can be used to develop short-term and long-term resource expansion plans. These studies allow entities to evaluate options for maintaining reliability while accommodating changes in resources and load and complying with state and federal policy directives.

A production cost study is a unit commitment and economic dispatch study that takes into account the uncertainties of the availability of generation plants, transmission facilities, fuel costs, and load forecasts while honoring operating reserve, transmission, and generation system requirements and constraints. The production cost study is central to the economic and reliability evaluation of generation and transmission projects by evaluating differences in production costs, potential transmission bottlenecks, and unserved load.

Integrated gas-electric systems simulations use new software models that allow transmission planning entities to identify constraints on the natural gas system, which could impact the electric transmission system by allowing simultaneous simulations of flows on both the electric transmission and natural gas pipeline systems. This type of study allows transmission planning entities to analyze the impact of varying demands of the natural gas electric generation on the natural gas pipeline system. Efforts are also underway to include gas system contingencies as an input to the software models.10

10 See e.g., MISO Planning Advisory Committee, An Intro to Gas-Electric Modeling in MISO's Clean Power Plan (CPP) Phase III Study (April 2015),