PJM, MISO, SPP, and ERCOT Join the Legal Fight Against EPA's Carbon Rules

Grid operators figure they'd better sue EPA, or at least file an Amicus Brief

But Saul, how can I sue these people and institutions? - Saul Goodman

On Friday, September 13th, four regional transmission organizations (RTOs) filed an Amicus Brief to the U.S. Court of Appeals of Washington D.C. challenging the U.S. Environmental Protection Agency’s regulations on carbon dioxide emissions from existing coal and new natural gas power plants and asked the Court to remand the rules back to EPA.

The four RTOs—PJM, the Midcontinent Independent Systems Operator (MISO), Southwest Power Pool (SPP), and the Electric Reliability Council of Texas (ERCOT)— stretch from New Jersey to parts of New Mexico and serve more than 156 million Americans in their respective service territories.

In their brief, the RTOs explicitly argued that the rules would jeopardize Americans’ ability to reliably secure sufficient amounts of power if they are enforced as is, despite claims by the Biden-Harris administration that the regulations would “improve public health without disrupting the delivery of reliable electricity.”

Unprecedented

This move by the four RTOs is unprecedented. After reaching out to several regulatory attorneys, we were told they were not aware of any previous incidents of RTOs filing an Amicus Brief asking for the court to remand the regulations back to the agency, highlighting how worried the grid operators are about what they consider to be overly vague and unworkable rules.

As Nick Pope wrote at The Daily Caller:

“Their proffered brief outlines in detail that without additional modification, the compliance timelines and related provisions of the Rule are not workable and are destined to trigger an acceleration in the pace of premature retirements of electric generation units that possess critical reliability attributes at the very time when such generation is needed to support ever-increasing electricity demand because of the growth of the digital economy and the need to ensure adequate back-up generation to support an increasing amount of intermittent renewable generation,” the grid operators wrote in their amicus brief.

“Such inevitable and foreseeable premature retirement decisions resulting from the Rule’s timelines will substantially strain each of the Joint [independent system operators’] / [regional transmission organizations’] ability to maintain the reliability of the electric power grid to meet the needs of the citizenry and the country’s economy.”

Reliability Concerns

These warnings are exactly what we discovered in our modeling of the impact of the rules in MISO and SPP in May of this year on behalf of the North Dakota Transmission Authority.

As we wrote in EPA’s Green Leap Forward, our analysis found that the EPA’s Regulatory Impact Assessment was modeling a dangerous overreliance on intermittent resources to meet the projected peak demand and reserve margin, as shown in the graph below, which shows the grid that EPA modeled for the MISO region.

To their credit, the RTOs took EPA to the woodshed for its lack of due diligence on the reliability front:

EPA performed an analysis of resource adequacy; however, by its own admission, EPA did not analyze the reliability implications to the grid, stating “EPA does not conduct operational reliability studies.”

When we did the EPA’s job for them by modeling the reliability of their modeled MISO and SPP grids, we found that wind and solar inevitably underperformed the EPA’s expectations, resulting in widespread rolling blackouts.

EPA’s Deaf Ear

Not only did the EPA fail to conduct a reliability analysis, the agency also failed to respond to the RTOs regarding their proposed changes to make the rules more reliable.

The RTOs outlined how they had suggested four reliability mechanisms to create reliability safety valves that would make the rules more workable, but the EPA did not even address their claims:

To that end, in their comments on the Proposed Rule, the Joint ISOs/RTOs offered four “Reliability Safety Valve” options that would help mitigate certain of their concerns regarding the effect of the Rule on the reliability of the grid. Specifically, Amici proposed:

1. Providing up-front, clear criteria on the use of the RULOF Provision and enforcement discretion;

2. Creating a sub-category of units needed for reliability;

3. Providing clear guidance to the states regarding what would constitute an acceptable state plan, within the context of a regional Reliability Safety Valve to address regional resource adequacy issues; and

4. Recommending to the states in a given region served by an ISO/RTO or balancing authority the creation of a bank of regional reliability allowances available to unit owners only during emergency conditions.

Amici accompanied their proposals with the legal support for EPA to adopt each such provision, along with suggested means of implementation. But in the Final Rule, EPA did not address these specific recommendations, let alone explain why it did not adopt them (emphasis added).

A Death of A Thousand Cuts

The rules on carbon dioxide emissions are not the only regulations threatening the viability of the existing thermal fleet.

Under the Biden-Harris administration, the EPA has written or updated regulations like the Ozone Transport Rule, the Coal Combustion and Residual Rule, and the Mercury and Air Toxics Standards, all of which are designed to place enough straws on the backs of reliable coal-fired power plants to compel their owners to shut them down.

At the same time, EPA’s tailpipe regulations will force automakers to sell more electric vehicles, increasing electricity demand.

One might think that the EPA evaluated the cumulative impact of these rules when considering their impact on grid reliability, but one would be wrong to think so. The RTOs wrote:

Amici’s proffered brief also explains to the Court that EPA’s failure to address Amici’s proposed mitigation measures is exacerbated by the impact the Final Rule will have when analyzed in conjunction with the numerous other proposed, pending, or existing EPA regulations that impact grid reliability and resource adequacy—all of which are resulting in a decline in reserve margins and premature retirement of dispatchable “baseload” resources.

Why would anyone who owns a coal plant or natural gas plant invest in technologies like carbon capture and sequestration, which the EPA considered the “best system of emissions reduction,” when they are concerned that the agency will simply find another regulatory means to skin the cat and shut them down?

Amici are also concerned about the chilling impact these collective rules will have on the investment required to retain and maintain existing generation units that are needed to provide key reliability attributes and grid services before the Final Rule’s compliance date.

Amici explain that in their experience, EPA’s new rules, in conjunction with other rules already in place, are significantly impacting baseload resources with high accreditation valuations and needed system attributes.

Conclusion

The RTO’s participation in the legal fight against the EPA’s overreach is a welcome sign because these ill-written rules pose a clear and present danger to the reliability of the American electric grid.

Despite the unprecedented nature of the legal filings, the number of news stories on this development has been quite small, which is why we felt compelled to write about it this week. That, and it gave us an opportunity to post the video below.

1. Like this piece to show your appreciation for MISO, PJM, SPP, and ERCOT.

2. Share, subscribe, and comment below to file your own Amicus Brief.

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