South Carolina PSC Hauls FERC Into Debate over Reliability Impacts of EPA Rules

September 12, 2011

S.C. Seeks FERC-led Review of EPA Air Rules
Hannah Northey

The Public Service Commission (PSC) of South Carolina has petitioned the Federal Energy Regulatory Commission (FERC) to convene a joint federal-state panel to investigate the effects on electric system reliability of proposed new air emissions rules proposed by the EPA. FERC Chairman Jon Wellinghoff and other FERC Commissioners had previously reported on a preliminary analysis which found that as much as 81 gigawatts of existing power plants— about 8 percent of all U.S. electricity generating capacity – was likely to be retired once the new EPA rules affecting the electric power sector (the Cross-State Air Pollution Rule and other standards for hazardous air pollutants) take effect. The request from the South Carolina PSC notes that “the impact of EPA’s power sector regulations on electric reliability and affordability has not been comprehensively studied by FERC.” The petition asks FERC to appoint a “Joint Board on Reliability that would “study and define the cumulative impact on electric system reliability of current and pending EPA utility regulations on impacted states and regions, and to develop a set of recommendations for FERC, EPA, affected regional entities and state commissions to implement to ensure that the power sector rules do not impair reliability or result in unreasonable increases in electric rates, either on a state-by-state or region-by-region basis, or in the aggregate.” The procedural route proposed by the South Carolina PSC is creative, albeit obscure. Section 209 of the Federal Power Act authorizes FERC to refer to a joint federal state board “any matter arising in the administration of [Subchapter II of the Federal Power Act],” which relates to the regulation of electric utility companies.” The joint board proposed by the PSCwould consist of nominees from the interested states and FERC representatives. According to the petition from the South Carolina PSC:

State regulatory commissions retain jurisdiction over resource adequacy and the reasonableness of electric service to ultimate consumers, which in many states is implemented through integrated resource planning. This shared responsibility for “keeping the lights on” in a reliable and affordable manner demands that we work together, in a formalized and meaningful forum, to study, influence and plan for the impact of EPA rules on electric reliability, and to recommend a course forward to deal with the rules’ effects.”

FERC, of course, did not comment on the petition, and the effort has little chance of success. Nonethess, the South Carolina PSC should be given credit for invoking this rarely used provision in the Federal Power Act to draw attention to an issue over which both federal and state regulators have a great deal in common: the need to maintain reliable electric service at reasonable rates. Regardless of the merits of EPA’s proposed rules, which will be debated in another arena, those rules have clear implications on the reliability of the nation’s electricity supply, and the prices paid by electricity consumers for that power supply. And state regulators should have a seat at any table where those issues are debated. After all, it is their phones that will be ringing if the lights go out, not the phones at EPA or at FERC.