New Year's Resolutions Part 1

Over the next several weeks, this blog will propose New Year’s Resolutions for those in and around the electricity policy arena.  We will start with one that should always be first in the minds of anyone with responsibility for oversight of the electric grid: shore up reliability and resource adequacy.

It’s a timely topic, because it is clear this isn’t your parents’ electricity grid.  While blackouts and reliability challenges have always been a reality, threats to grid reliability have increased in frequency and criticality.  While some of this is outside the control of any one entity – for example, the challenges posed by technological changes in how electricity is produced, or extreme weather – other matters are squarely in the purview of those charged with making decisions about the institutions in which energy providers operate.  And on this score, there is more than enough evidence to suggest there are problems.  As shown on this map released by the North American Reliability Corporation last month, reliability risks are real, and they are not limited to a small footprint.

The challenges vary by region, but at least two takeaways should inform discussions.  In regions covered by RTOs, especially those where the RTO is charged with operating a market that ensures resource adequacy, more must be done to fix failing market designs that are not maintaining and building a fleet of resources that can provide 24/7 reliability.  While California and Texas are two prime examples of the failure of flawed deregulation schemes, it should be acknowledged that merely the presence of traditional state-led regulation (such as in large parts of the West) does not alone ensure resource adequacy.  In these regions, states must take a proactive role in ensuring their utilities can provide for reliability, and this starts with a realistic assessment of the availability of capacity to deliver energy on demand throughout the region.  These realistic assessments then form the basis of the plans that can deliver the power consumers expect.  Thus, it is with some encouragement that consumers should view developments such as the Western Resource Adequacy Program, which is attempting to do just this very thing.

The sobering thing about New Year’s Resolutions is that for most, they only last a few weeks before falling back into old habits.  Let’s hope that a focus on reliability and resource adequacy is one that has staying power year-round.