Two Cato analysts suggest a return to the past-vertical integration, but now with no state regulators.
The defeat of the energy bill in...
Life Along the Potomac
What federal regulators should do to ensure security, reliability, and cleaner air in our nation’s capital.
longer-term solutions. As an initial matter, FERC found that the interstate service would in fact be rendered “inadequate or insufficient” if the plant were to cease its operations. Similar to the DOE, FERC reached this conclusion based on possible violations of NERC’s reliability standards, a high probability of a contingency, and the critical national security importance of the federal load located near central D.C.
In conducting its investigation, FERC primarily relied on the parties’ submissions and responses to its data requests, while rejecting demands for a formal evidentiary hearing. The adopted solution was to require PJM and Potomac Electric Power Co. (PEPCO), the local utility, to develop jointly a plan to maintain adequate reliability, with and without the Potomac River plant, during planned and forced outages for the duration of the DOE order, and for the time between the end of the DOE order and when a long-term solution is in place. FERC also required the joint plan to include a supporting study report and a timeline and description of implementation milestones.
One of the key elements of the joint plan, which FERC accepted in June 2006, was the construction of transmission upgrades on the PEPCO system that would allow it to import more power into the region and make regional reliability less dependant on the Potomac River plant. Mindful of its role in the successful implementation of the plan, the DCPSC issued a series of orders in early 2006 expeditiously approving the proposed upgrades. In addition, the DCPSC instituted a demand-response study to ensure that load response in the District of Columbia remains sufficiently flexible.
Through these coordinated efforts, the DOE, FERC, and the DCPSC successfully averted the looming reliability crisis in Washington, D.C., and provided a road map for a workable long-term solution to the region’s power-supply needs. Nonetheless, the environmental issues arising out of the Potomac River plant’s continued operation could not be addressed directly by these energy regulators. Instead, the EPA had to sort out the environmental harm claims made by the opponents of the plant’s continued operation and chart an environmentally sound solution to the security and reliability conundrum posed by the plant’s shutdown and subsequent resumption of its operations. Although the DOE order contained references to the behind-the-scenes coordination with the EPA, it was not until June 2006 that the EPA comprehensively addressed the environmental issues posed by the plant in the context of its shutdown.
In its June 2, 2006, administrative compliance order by consent, 3 the EPA confronted the issues posed by the plant’s continued operation. The order was issued pursuant to Section 113(a)(1) of the Clean Air Act that grants the EPA the authority to require persons to comply with an applicable state implementation plan or permit issued by a state. As acknowledged by the EPA, its order was the result of the settlement discussions between the agency and Mirant, as well as broader inter-agency discussions involving the DOE and the VDEQ.
The remedies fashioned by the EPA clearly recognize the need to take into account the DOE’s reliability and security