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THE POWER SHORTAGE THREAT: The nation’s grid watchdog is warning that large shares of the U.S. face a heightened risk of electricity shortages in the coming months, firming up assessments individual grid operators have made in recent weeks about the threat of blackouts during peak summer demand.
The North American Electric Reliability Corporation, which is charged with protecting grid operations across the U.S. and Canada, released a report today assessing the entire West to be at “elevated” risk of struggling with insufficient electricity reserves between June and September.
NERC judged much of the Midwest’s risk level to be “high.”
The details: Midcontinent Independent System Operator, which manages the grid in 15 states and Manitoba, has 2.3% less generation capacity than it did last summer and therefore faces “high risk of energy emergencies during peak summer conditions,” NERC’s report said, adding that load shedding (i.e. outages) may be necessary under “extreme peak demand.”
“Expected resources do not meet operating reserve requirements under normal peak-demand and outage scenarios,” the report said.
Continued drought conditions and extreme heat pose special threats for Texas, California, and other Western states, according to the report, not only for driving demand up to peak levels but also for limiting the output of hydro-electric generators.
NERC noted the threat of wildfires, too, for the hot, dry West, because they can damage transmission infrastructure and trigger power shut-off programs.
The assessment adds to public warnings utilities, grid operators, and public officials have already been issuing to prepare customers for shortages and potential outages.
Who doesn’t have to worry: NERC identified the Southeast, mid-Atlantic, and Northeast regions to be at low risk for experiencing insufficient capacity.
Mark Dyson, a managing director of the carbon-free electricity program at RMI, noted those regions are sitting on double-digit reserve margins because utilities have added substantial new capacity with new natural gas plant builds, but he argued the margins exceed what’s necessary and cost ratepayers.
“There's an easy solution to shortages, which is to just build that extra 10 gigawatts of power plants, but that's a pretty expensive, blunt force solution to what instead should be a problem we would think of solving with modern technology,” Dyson told Jeremy.
The political picture: For renewable energy advocates like Dyson, these warnings about grid fragility illustrate the need to build more distributed and utility-scale solar projects more quickly and to expand wind generation capacity, coupled with battery storage technology.
For coal backers, it’s a lesson in what happens when utilities underappreciate coal and retire coal-fired units too quickly for the sake of going green.
“We’re encouraging state utility commissioners to be cautious of retirement of dispatchable resources,” said Michelle Bloodworth, president of coal-fired power trade group America's Power. “We think there's got to be change to better, explicitly value the attributes [of coal] that we don't think are being valued now.”
MISO in particular has acknowledged that retirements of “always-on" generating units like coal plants have helped drive it to this point. MISO’s utilities have retired some 18,300 megawatts since 2015, according to America’s Power.
One more thing: The power shortage issue surfaced during EPA Administrator Michael Regan’s testimony before the House Energy and Commerce’s Environment and Climate Change Subcommittee yesterday, where some Republican members criticized the Biden administration’s various regulations to limit pollution from power plants as increasing the burden on coal and forcing it out.
Regan demurred: “I think we have to look at the facts and the facts are there hasn't been coal regulation since the Obama administration and the markets are what's driving these coal closures,” he said.
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HOUSE DEMOCRATS ADVANCE ANTI-GOUGING BILL: The House Rules Committee advanced one of Democrats’ anti-price gouging bills yesterday as the national average gasoline price breaks new records almost daily, and the full chamber is expected to vote on the proposal this week.
The Consumer Fuel Price Gouging Prevention Act would authorize the president to issue an energy emergency and prohibit sales of consumer fuel at an “unconscionably excessive” price.
It differs slightly from a separate proposal that House and Senate Democrats introduced last week intended to target price gouging for a wider range of products than just fuel. That proposal leaves the president out of it but it does, like the Consumer Fuel Price Gouging Prevention Act, charge the Federal Trade Commission with enforcing a prohibition of excessive prices.
Democrats and environmental groups have accused energy companies of exploiting drivers and considered their immense profits the evidence.
“Big Oil is turning humanitarian disaster and consumer pain into Wall Street profits,” said Lukas Ross, program manager at Friends of the Earth.
FOE aggregated earnings data showing that the country’s top oil and gas companies earned $30.3 billion in profits during the first quarter of 2022, up 155% from the first quarter of 2021.
Meanwhile, players in the oil and gas industry and market analysts have disputed the charge.
Chet Thompson, president and CEO of the American Fuel and Petrochemical Manufacturers, told House leadership in a letter yesterday the anti-gouging bill is “detached from market realities.”
“Consumer fuel prices, like the prices of other commodities, have been driven higher by concerns about adequate supply and by increases in the costs of production,” Thompson told Speaker Nancy Pelosi and Minority Leader Kevin McCarthy.
Chamber opposes: The U.S. Chamber of Commerce warned today that the bill would result in “rationing and gas lines” across the country.
“The ‘Consumer Fuel Price Gouging Prevention Act’ would be more accurately named the ‘Bring Back 1970s Gas Lines Act,’" chief policy officer Neil Bradley said in a statement. “Economics 101 teaches us that when demand exceeds supply, prices rise.”
The British version: Business Secretary Kwasi Kwarteng told the heads of British fuel industry trade associations in a letter yesterday that he wants them to ensure drivers are getting a fair deal with high petrol prices.
GOP MOVES TO ENACT NEW LEGISLATION TO REQUIRE LEASING, FIVE-YEAR PLAN: Senate Republicans introduced a new bill that would require Interior Secretary Deb Haaland to immediately resume oil and gas lease sales on federal lands, an effort to drive up domestic production and help offset record-high gas prices in the U.S. The legislation, which Sen. John Barrasso introduced to the Energy Committee, would also require Interior to finalize its five-year plan for offshore drilling, which is slated to expire in June. The Interior Department has so far declined to say when it will publish the plan, or how far along it is on the plan, injecting new uncertainty into the future of leasing projects under the Biden administration.
ETHANOL LOBBY PRAISES IOWA’S NEW E15 VENDOR STANDARD: Industry groups hailed Iowa Gov. Kim Reynolds for signing a new “access standard” into law yesterday requiring fuel retailers to sell E15 gasoline.
Monte Shaw, the executive director of the Iowa Renewable Fuels Association, called the new standard “groundbreaking” and said its design was to make cheaper alternatives to E10 more widely available.
E10 accounts for the overwhelming share of fuel in the country, and E15 has been selling between 10 and 30 cents cheaper per gallon than E10 in Iowa, Shaw said.
Emily Skor, CEO of ethanol group Growth Energy, said the standard “allows drivers to make a difference for the environment by simply filling up at the pump” and to save money.
Iowa’s new law follows the Biden administration’s decision to waive regulations on E15, allowing it to be sold throughout the summer months, in a bid to tame fuel prices.
EU PLAN FOR DITCHING RUSSIAN ENERGY: The EU commission introduced a roughly $315 billion proposal today for accelerating the bloc’s transition away from Russian energy supplies by the year 2030.
The proposal, dubbed “RePowerEU,” relies heavily on boosting LNG imports and renewable energy, two steps that are key for the EU as it moves to cut ties with Russia while also attempting to stay the course on its climate policies.
The proposal would dedicate 10 billion euros toward gas infrastructure and 2 billion euros for oil, with the rest dedicated to clean energy investments.
“We are taking our ambition to yet another level to make sure that we become independent from Russian fossil fuels as quickly as possible,” European Commission President Ursula von der Leyen told reporters in Brussels. “This will be speed-charging for our European Green Deal.”
In the near term, the EU’s push will depend heavily on securing alternative LNG supplies: The bloc must replace the 50 billions of cubic meters annually it receives from Russia—which makes up more than one-third of its total annual supply.
To that end, leaders have pointed to African nations, including Angola, Nigeria and Senegal as potential options.
"As Russia pursues its unprovoked war in Ukraine, we must also plan for gas supply disruptions and their impact with solidarity measures and possible price interventions," said Kadri Simson, the EU commissioner for energy.
Longer-term, the RePowerEU proposal calls for transitioning to 45% renewable energy by the year 2030: That is roughly two times its current levels of renewable production, and an uptick from its previous goal of 40% by 2030.
To help deliver on renewables, the EU Commission is embracing offshore wind, solar, and biomass as the primary drivers of energy production. It also called on individual governments in the 27-nation bloc to further develop their individual proposals on renewable energy.
REPowerEU includes plans for a new “solar rooftop initiative,” or a phased-in rule that would legally require all EU countries to install solar panels on all new public and commercial buildings.
And later today, leaders from four EU countries—Germany, Belgium, Denmark, and the Netherlands—are slated to sign a pledge committing to developing roughly 150 GW in offshore wind capacity by 2050; an almost tenfold increase in current capacity.
The package is funded largely through an economic stimulus program, and is expected to include oil-investment funding for some countries, including Hungary, that are deeply dependent on Russian crude.
In dangling the financial incentives, leaders are hoping to win over the support of possible holdouts, namely, Hungarian Prime Minister Viktor Orbán, who for the last two weeks has single-handedly blocked the EU from passing a Russian oil embargo, citing painful economic consequences for his country.
Earlier this week, Hungarian Foreign Minister Péter Szijjártó reiterated his country’s demand that they either be exempt from the Russian oil embargo or receive a large influx of cash to support what he described as a “total modernization of Hungary’s energy structure.”
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THURSDAY | MAY 19
10:00 a.m. 366 Dirksen Interior Secretary Deb Haaland will appear before the Senate Energy and Natural Resources Committee for a hearing on the department’s budget request for FY 2023.