Subcommittee Questions Federal and State Regulators on Reliability Impacts of New EPA Rules

September 14, 2011

WASHINGTON, DC - The House Energy and Commerce Subcommittee on Energy and Power, chaired by Rep. Ed Whitfield (R-KY), held a hearing today with members of the Federal Energy Regulatory Commission and state regulators to discuss the impacts of new EPA regulations on America's electric reliability.

The reliability of electricity is essential to our economy, national security, and public health.  EPA has proposed a suite of regulations affecting America's power sector but the total impact of these rules on the nation's grid remains unknown.  This uncertainty has led to great concerns that utilities won't be able to keep the lights on in our homes, hospitals, and schools once these new regulations go into effect.

Under the Federal Power Act, Congress assigned FERC the responsibility and authority to protect our nation's electric reliability. As the nation's primary electricity regulators, FERC has the responsibility to perform a formal analysis on the reliability implications of EPA's new set of rules. Members questioned FERC over its failure to produce such an analysis. A "preliminary analysis" conducted by FERC's staff showed up to 131 gigawatts of power may be at risk, equal to 16% of the country's electricity capacity.

Today's hearing follows the committee's letter to FERC Chairman Jon Wellinghoff seeking information about the extent to which EPA consulted FERC in the development and implementation of its new power sector rules. Wellinghoff's written response stated, "communications between FERC staff and EPA staff have not been ongoing," indicating a clear cause for concern given the potential reliability implications of EPA's power sector rules.

The lack of coordination between EPA and FERC became more apparent during today's testimony when commissioners expressed the need for more proactive discussions to ensure reliability.

FERC Commissioner Phillip Moeller emphasized the need for FERC to become more involved in the analysis of EPA rules, calling for "an open process involving FERC, NERC, and stakeholders to help reduce the possibility that we will have reliability problems as a result of the EPA." 

FERC Commissioner Marc Spitzer testified, "Reliable service of electricity is essential to the health, welfare and safety of the American people and necessary to serve our economy. I recommend that FERC and the EPA continue their dialogue but in a more formalized and expansive fashion.  Given the potential impacts of the EPA's proposed rules on the bulk-power system, such coordination is critical to ensuring that EPA does not enforce its rules in a vacuum."

State utility commissioners also voiced concerns with EPA, stating the agency has not fulfilled its commitment, as outlined in the rulemakings, to work together with state and regional entities to ensure reliability.

"My concern is that I do not have enough information to make regulatory decisions for the utility industry and consumers in my state.  As far as I know, the Environmental Protection Agency has not conducted a detailed study of the entire set of rules that would estimate their impact on electricity prices, economic activity, number of jobs created or destroyed, and the reliability of electric service," said Georgia Public Service Commissioner Stan Wise.

State regulators stressed the need for increased certainty and greater flexibility during the rulemaking process.

"The costs, feasibility, and reliability impacts of EPA's regulations have not been thoroughly examined, and the consequences of implementing these requirements without adequate review could be irreparable," said West Virginia Public Service Commissioner Jon McKinney. "We cannot afford to risk the health and safety of millions of Americans by compromising the security of our electricity grid, and should not burden electricity customers with excessive costs by inflexible implementation of environmental regulations.  Greater flexibility would preserve electric reliability and mitigate additional rate increases."

To eliminate the uncertainty surrounding EPA's rules, the Energy and Commerce Committee has developed legislation to require a cumulative impacts analysis on jobs, electricity costs, and reliability. The full House is expected to vote on that legislation, the TRAIN Act, next week.

"The EPA has shown insufficient concern over the cumulative burden of its regulations as it moves ahead to implement them," said Whitfield. "This attitude of "˜regulate first, ask questions later' needs to end. We need to know the cumulative impact on reliability of all the rules that are in the works, which is why the TRAIN Act is so important," said Chairman Whitfield.