New England Gas-Electric Forum
At the Commission’s recent New England winter reliability forum, I heard loud and clear the concerns expressed about rising consumer energy costs and uncertain energy adequacy the region has during extreme winter weather events. Underscoring the need for urgent action, a panelist from the Northeast Power Coordinating Council reminded us that “extreme” is no longer synonymous with “unusual.” It’s what we need to manage.
As I said in Burlington, there is no single solution to address the region’s challenges. Mitigating consumer costs and winter reliability risk requires collaboration across the Commission, state regulators, together with ISO New England and market participants, to consider a suite of solutions that likely span federal, state, and even local jurisdictions. It is not lost on any of us that these conversations in New England have happened before, for almost two decades, and that finding alignment on a path forward has been challenging. This time has to be different.
One of my primary takeaways from the forum is that this Commission can and must lead in charting a course that will finally begin moving the gears forward toward real solutions. It is no longer acceptable to sit back and wait to see what the region may bring forward at some point.
I share Commissioner Danly’s perspective on the urgency of the issue. I disagree, however, that course-correcting from the Commission’s prior combative stance toward states is the problem. I also didn’t hear at the forum that markets cannot work, but I certainly share the perspective that, at this moment, the markets may not be delivering just and reasonable rates. To me, exerting Commission leadership to move this ball forward does not suggest we know better than New England states and stakeholders, or that we have the right to override states’ perspectives. Nor does it suggest that the entire solution set to these challenges rests within the Commission’s jurisdiction. But there is no reason the Commission should stop pressing the region or delay further action on the elements of the solution that are within our authority.
I invite parties to provide feedback to the Commission in Docket No. AD22-9 on a number of topics that I believe emerged from the forum as critical next steps.
First, in the near term, we must understand the full scope of this energy adequacy challenge the region faces. ISO New England proposed in advance of the forum that “the region should undertake a comprehensive study of both the energy adequacy problem and the potential solutions for addressing the problem.” A number of panelists, including state representatives, concurred. However, I did not come away with a level of specificity as to what exactly that study should look like. My inclination is that the study must be resource neutral and adequately explain the “when,” “where,” and “why” of electric system risks so that the Commission, states, and stakeholders can objectively evaluate needs over different timeframes and across jurisdictions.
We know that the root of New England’s winter electric system reliability challenge is the significant dependence on natural gas in these extreme conditions, along with gas supply constraints during extreme winter weather. Shoring up or adding more natural gas supply capability is one way to address these constraints. It is only one way. The region can also diversify away from reliance on natural gas for electric generation and can reduce both electric and gas demand during these extreme weather conditions. We need this resource neutral energy adequacy study to illuminate the efficacy of solutions across these different risk mitigation approaches. We need all of them.
I am interested in hearing from stakeholders their views on the form, content, and objectives of this study and the processes by which the Commission might encourage or direct that it get done.
Second, I heard from parties at the forum that there is likely a set of wholesale market reforms that, if prioritized, can be a meaningful part of the solution set. But it is imperative that ISO New England’s markets take better aim at the winter reliability risk we are all worried about, even as we await this better information to bring the scope of the energy adequacy challenge into sharper focus. There are several market reforms ideas that emerged at the forum that I invite parties to expand upon in their comments. Rather than diving into market details here, I will post on my FERC website later today a statement highlighting concrete examples that I heard. I appreciate additional feedback on this front.
I believe the Commission can lead in addressing these challenges in a manner that will not only advance the effort toward reducing the winter reliability risk that motivated the forum, but will also provide greater clarity as to what, if any, non-market solutions should be considered. I am open to a specific proposal on that front to address the near-term risk should it come before the Commission. But ultimately, we must move toward a sustainable, resource-neutral solution, and there is no time like the present to begin that work in earnest.
Thank you Kal and to the team and others who have been working on the proposal. In its State of the Markets report, NERC described the cyber threat the electricity industry faces as “both unprecedented and relentless.” It’s always good to be focusing on these issues and thinking about how to improve. In this proposal we’ve put forward a workable set of good ideas. I think the prequalified list is reasonable and I look forward to stakeholder comments on whether that list should be expanded or if we hit the mark.
I have said in the past that, when it comes to cybersecurity, we should mandate the investments or best practices that will enhance the reliability and security posture of the Bulk-Power System. This continues to be the case. Our CIP standards are foundational and are respected as strong, and they should stay as current as we can make them. Of course, it is a length process to develop new CIP standards. As a practical matter, I am interested in what role that this proposal can play in helping to fill that gap relative to getting stronger rules in place, because the administrative process doesn’t keep up with the ever evolving threat. Thanks again and I look forward comments.