Statement for the Record, Hearing on “The Power Struggle: Examining the Reliability and Security of America’s Electrical Grid.”

March 11, 2024

Dear Chairman Fallon, Ranking Member Bush, and members of the Subcommittee:

Thank you for your decision to hold a hearing on March 12, 2024, titled “The Power Struggle: Examining the Reliability and Security of America’s Electrical Grid.” My name is Devin Hartman, and I am the director of energy and environmental policy at the R Street Institute. I have worked on electric reliability policy as a staffer at the Indiana Utility Regulatory Commission and Federal Energy Regulatory Commission (FERC), represented large consumers on reliability policy before FERC and the North American Electric Reliability Corporation (NERC), and have published research pieces and testified before FERC on electric reliability in my current capacity at the R Street Institute.[1] I am fortunate to work alongside three R Street colleagues with electricity expertise, including Beth Garza, the former independent monitor of the Electricity Reliability Council of Texas (ERCOT); Chris Villarreal, a former technical staffer of two state public utility commissions (PUCs); and Michael Giberson, a leading academic electricity economist.[2]

The scope of these comments will focus on bulk electric system reliability, excluding
cybersecurity and physical attack risk. Intentional attack risk is critical to mitigate, but often more appropriate for non-public discussions. It is worth noting that most power service interruptions affect local distribution systems, which are regulated by state authorities.[3] Such outages tend to be localized, whereas bulk system failures can result in widespread outages. Although less than one percent of customer service interruptions result from bulk system failures, the consequences of those outages can be far more damaging.[4] The economic damages and loss-of-life consequences of bulk reliability events are highly sensitive to the duration of outages.[5] This underscores the value of not only reducing the probability of reliability events, such as controlled rotating outages, but prioritizing avoidance of uncontrolled cascading outages while ensuring resilience to “bounce back” quickly from loss-of-load events.

The outlook for bulk electric reliability is deteriorating for a variety of reasons, which begs for Congress’s thorough attention.[6] Two intersecting trends underscore this ominous theme;
government restrictions on power supply have never been greater at a time when power demand is resurgent.[7] Of particular concern is that most restrictions on power supply are beyond the scope of electric institutions. Specifically, the unintended effects of policies outside the reliability community’s control have reached an unprecedented level, with no clear pathway toward accountability and reconciliation. To punctuate this, last year NERC identified “energy policy” as a key risk to grid reliability for the first time.[8]

On top of this, climate change is inducing more extreme weather events that exacerbate reliability risk.[9] All in all, the past is not prologue. The electric policies that led to a reliable bulk system historically will not necessarily ensure reliability moving forward. Future reliability will require modifying electric policies on the supply-side while overhauling overdue demand-side reforms. Technological change is driving a growing reliability advantage for market-based electricity policies.[10] Perhaps most importantly, enshrining accountability and institutional coordination is imperative to overcome the diffusion of reliability responsibility.

Read the full letter below:

[1] For e.g., see Devin Hartman, “Enhancing Market Signals for Electric Resource Adequacy,” R Street Policy Study, No. 123, Dec. 2017. https://www.rstreet.org/wp-content/uploads/2018/04/Final-123-1.pdf.

[2] See https://www.rstreet.org/people/beth-garza; https://www.rstreet.org/people/chris-villarreal/; and https://www.rstreet.org/people/michael-giberson.

[3] Alison Silverstein et al., “A Customer-focused Framework for Electric System Resilience,” Grid Strategies, May 2018. https://gridprogress.files.wordpress. com/2018/05/customer-focused-resilience-final-050118.pdf.

[4] Trevor Houser et al., “The Real Electricity Reliability Crisis,” Rhodium Group, Oct. 3, 2017. https://rhg.com/research/the-real-electricity-reliability-crisis-doe-nopr.

[5] Devin Hartman, “Differentiated Reliability,” Future Power Markets Forum, July 22, 2021. https://www.rstreet.org/wp-content/uploads/2021/07/Hartman-FPMF-Differentiated-Reliability.pdf; https://clean-coalition.org/disaster-resilience/.

[6] Devin Hartman, “Teeing up Congressional Grid Reliability,” September 25, 2023.
https://www.rstreet.org/commentary/teeing-up-congressional-grid-reliability/.

[7] Devin Hartman, “Low-Energy Fridays: How Congress Can Liberate Electric Generation,” January 5, 2024. https://www.rstreet.org/commentary/low-energy-fridays-how-congress-can-liberate-electric-generation/.

[8] Sonal Patel, “NERC Identifies Energy Policy as Key Risk to Grid Reliability Amid Evolving Challenges,” POWER, August 24, 2023. https://www.powermag.com/nerc-identifies-energy-policy-as-key-risk-to-grid-reliability-amid-evolving-challenges/.

[9] Devin Hartman, “Testimony to FERC: Climate Change, Extreme Weather, And Electric System Reliability,” Docket No. AD21-13-000, May 30, 2021. https://www.rstreet.org/outreach/testimony-to-ferc-climate-change-extreme-weather-and-electric-system-reliability/.

[10] Michael Giberson and Devin Hartman, “Electric Paradigms: Competitive Structures Benefit Consumers,” R Street Policy Study, No. 293, September 2023. https://www.rstreet.org/wpcontent/uploads/2023/09/FINAL_r-street-policy-study-no-293.pdf.