Thank you, Chairman Glick, and good morning.
I appreciate the comments you just provided and will add two points that build on them.
First, the increasingly common extreme weather events that Americans face are stressing the electricity grid in unprecedented ways. The circumstances in each of these events are unique. And the unfortunate accumulation of data around these events over time can teach us important lessons about the ways in which extreme heat and cold, high-wind hurricanes, fires and other disasters overwhelm the energy system in the operational time frame. These learnings should be used to help to improve the planning process in a manner that mitigates future risk.
As we develop these learnings, we need to embrace the nuance that lives in the facts of any weather event. It is counterproductive and, frankly, an abdication of Commission duties to conflate varying facts within or across events in order to blame a particular market construct or resource type.
In California last August, the grid operator found itself short 500 MW over a period of two hours one day and 20 minutes another, due to the combination of prolonged extreme heat and drought conditions and what flowed from that. In contrast, in Texas this February, ERCOT was short over 25,000 MW over the better part of three days, largely due to cold related failures at gas production and gathering sites as well as the failure of generators to operate in the extreme cold – despite an anticipated 43 percent reserve margin.
We have a good deal to learn from both of these experiences about potential improvements in the planning and operational timeframes, as well as reliability standards improvements. However, it is counterproductive to our ability to learn to continue to conflate these two very different events. One thing that is a clear link between these two events, which CAISO’s final root cause analysis and FERC and NERC staff’s preliminary findings on Texas both show, is that both events were driven first and foremost by the extraordinary—and under-planned for—extreme weather, which the Chairman so eloquently addressed.
These climate change-driven events are landing on a grid in transition. The resource mix is changing in increasingly predictable ways as market signals, governments, corporations and utilities make decarbonization commitments.
The Commission has not made these choices. But it is our job to protect customers and facilitate reliability in light of them, by ensuring these low-cost resources have the chance to compete and working to manage any challenges that the evolving resource mix necessitates. In fact, we are doing this in myriad ways – importantly, holding today’s discussion to learn from reliability experts, other regulators and stakeholders, as well as past technical conferences on energy and ancillary service reform, resource adequacy, and climate change and extreme weather. We have issued an advanced notice of proposed rulemaking to consider transmission policy reform; we are considering proposals to better assess the value that all types of resources can and will provide to the system, and we’re approving a winterization reliability standard which represents an important, initial step.
Large regions of the U.S. grid have already proven capable of managing high penetrations of renewables, and every credible study suggests that a broadly interconnected system can cost-effectively manage the resource mix transition with all deliberate speed. Doomsday predictions about the reliability and cost impacts of potential federal legislation or state decisions do not find support in the data. At best, they assume a static regulatory regime incapable of evolving out of the status quo.
Our authorizing statutes oblige the Commission to act in a technology neutral manner. I am not here to shirk from this charge; instead, I embrace the Commission’s role to seek innovative, cost-effective solutions and only sound the reliability alarm when that alarm is merited. FERC must rely on the facts to drive our efforts to support system reliability.
While my opening comments have focused on extreme weather and the changing resource mix, I am look forward to learning many facts from all of our distinguished panelists today, including on the cybersecurity panel.