FEDERAL ENERGY REGULATORY COMMISSION 

WASHINGTON , D. C. 20426 

Janet G. McCabe 

Acting Assistant Administrator 

Office of Air and Radiation 

U.S. Environmental Protection Agency 

1200 Pennsylvania Avenue, N.W. 

Washington, D.C. 20460 

May 15, 2015 

Dear Acting Assistant Administrator McCabe: 

Thank you for your letter of May 6, 2015, regarding the Environmental 

Protection Agency's (EPA) Clean Power Plan proposal and the Commission's 

recent conferences on the proposal. We appreciate the attendance and 

participation by you and other EPA representatives at those conferences, and your 

openness to the perspectives offered by us and others there. We also appreciate 

the fact that you and others from EPA have met with each member of the 

Commission on more than one occasion. As you know, the conferences focused 

on the proposal's possible effects on three aspects of the Commission's 

responsibilities: electric reliability; energy infrastructure; and wholesale energy 

markets. Our letter today addresses the reliability issues discussed at the 

conferences. 

First, as you know, many of the conference speakers expressed concern 

about the interim goals in the proposed Clean Power Plan, and suggested a need 

for more flexibility in the early years of compliance. This issue may be the most 

prominent, and most discussed, of the reliability issues raised at the conferences 

and elsewhere. As your letter recognizes, EPA's final rule should provide enough 

time and flexibility for affected entities to take the actions that they must take to 

ensure system reliability. These actions could include the construction of gas or 

electric infrastructure to support the addition of new capacity. Thus, we trust EPA 

will consider the concerns raised with the interim goals, and other views expressed 

on this issue, as EPA finalizes its rule. Various commenters indicated, for 

example, that more flexibility on the interim goals may lessen reliance on other 

processes for addressing reliability. 

Apart from this issue, we will focus on how the Commission can continue 

to fulfill its responsibility on Bulk-Power System reliability after EPA releases any 

final rule on the Clean Power Plan. Numerous panelists at the conferences urged 

the Commission to work with EPA to address any reliability issues that arise as 
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states comply with the Clean Power Plan. Specifically, panelists recommended 

that the Commission work with EPA to establish processes for modifying 

compliance obligations when unforeseen delays in implementation efforts could 

otherwise risk harm to reliability (a "Reliability Safety Valve") and for generally 

reviewing state plans for interstate impacts on reliability ("Reliability Monitoring 

and Assistance"). 

Reliability Safety Valve 

For the purpose of this letter, we define the Reliability Safety Valve as a 

process through which the affected entities can petition the EPA for temporary 

waiver or adjustments to the emissions requirements or compliance timelines in an 

approved state plan to preserve Bulk-Power System reliability. 

If the EPA chooses to adopt a Reliability Safety Valve, the Commission's 

participation should be clearly defined, as in the process for the Mercury and Air 

Taxies Standards (MATS) fifth year.

1 Specifically, after a plan is approved and in 

place, the Commission could review a petitioner's claims that unforeseen or 

emergency system conditions will result in violation of a Commission-approved 

Reliability Standard or reserve margin deficiency, unless a compliance obligation 

is adjusted. In addition, as we indicated for the MATS process, we could identify 

issues, pursuant to our other areas of authority, such as requirements in a 

Commission-approved tariff. Similarly, the Commission could review the 

petitioner's proposed mitigation as to whether it will resolve the Reliability 

Standard violation or reserve margin deficiency. In this narrow role, the 

Commission would not opine on other issues that EPA could consider, such as 

whether an applicant had made sufficient efforts to resolve the Reliability 

Standard violation without deviating from approved emissions requirements or 

compliance timelines or whether there were other ways to resolve the Reliability 

Standard violation or reserve margin violation deficiency. That is, the 

Commission's role would be to consider whether a specified set of loads, 

resources and grid facilities would cause a Reliability Standard violation or 

1 See Policy Statement on the Commission's Role Regarding the 

Environmental Protection Agency's Mercury and Air Taxies Standards, 139 FERC 

~ 61,131 (2012); The Environmental Protection Agency's Enforcement Response 

Policy For Use Of Clean Air Act Section 113(a) Administrative Orders In Relation 

To Electric Reliability And The Mercury and Air Taxies Standard (Dec. 16, 

20 11 ), http://www .epa. gov/ compliance/resources/policies/ civil/ erp/mats-erp. pdf. 
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reserve margin deficiency, not whether the applicant or EPA should pursue a 

different lset of options and, if so, which options. 

I:fJ EPA is interested in further developing this concept, our staff is 

available/ to work with EPA staff on the specific reliability-based information that 

applicants should be required to provide to facilitate our assessment of a request 

for reliefl Our expectation is that this information could be similar to the 

information required of applicants seeking a fifth year under MATS, with any 

modificaJions needed for the context of the Clean Power Plan. 

Reliability Monitoring and Assistance 

As noted above, various panelists at our conferences advocated a process 

that takes place prior to, or in parallel with, EPA's review of state plans to identify 

and potentially mitigate potential reliability concerns. Industry participants 

suggested that this oversight consist of Commission and/or North American 

Electric Reliability Corporation (NERC) review of all state plans to ensure that the 

combined effects of state plans do not negatively impact electric reliability. 

Before turning to the technical aspects of these proposals, it is important to 

note thatlthe Commission's role on reliability is defined by Congress, and 

generally consists of approving proposed reliability standards for the Bulk-Power 

System, if they meet the statutory criteria, and then enforcing or overseeing 

enforcenient of those standards. The Commission's exercise of its rate jurisdiction 

also, at times, has effects on reliability issues. But, reliability also depends on 

factors yond the Commission's jurisdiction, such as state authority over local 

distribution and integrated resource planning. Similarly, state authority to propose 

plans for compliance with the federal Clean Air Act does not depend on, or 

require, Commission approval. The Commission also lacks specific statutory 

authority to require a public utility to build a new power plant or new transmission 

line. The Commission is not seeking to alter this balance of Federal and state roles 

or to assbrt authority over state plans. Any Commission role in this area must be 

crafted refully to respect the authority and responsibility of states. 

I 

With this background, we believe a process to review state plans for 

potential! reliability concerns should rely primarily on existing processes for 

identifying and addressing reliability issues, adjusted as appropriate for the 

circumst nces. Planning authorities such as RTOs and ISOs or, in other areas, 

NERC, Regional Entities or reliability coordinators currently model the electric 

grid to plan and assess the reliability of the Bulk-Power System. These processes 

are generally adequate, although increased effort by industry will be needed as 
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State plans are developed. As appropriate, the Commission could then review the 

analysds, suggest or request additional or modified analyses or, in limited cases, 

perform analyses itself. Under existing FERC statutory authority, the Commission 

could look more closely at particular areas or issues, subject to resource 

availabrlity, and taking into consideration requests by EPA, States, or others. 

For areas or issues of concern, the Commission could convene technical 

conferences, require presentations at Commission meetings, or engage in other 

forms qf outreach at fora such as the National Association of Regulatory Utility 

Commissioners and NERC meetings. If requested by EPA, the Commission could 

providJ formal input on a particular plan or set of plans, subject to resource 

availability. In any event, the Commission's role generally should focus on the 

regional aspects of Clean Power Plan compliance. Our staff is prepared to work I 

withE~ A staff to provide this Reliability Monitoring and Assistance. 

Conclusion 

I 

1fhe Commission intends to stay informed about the development of state 

plans sb that the Commission will be able to respond to Bulk-Power System 

reliability issues that might arise. We appreciate EPA's engagement with the 

Commission on how the Clean Power Plan may affect the reliability of the Bulk- 1 

Power System and hope to continue this dialogue as the Clean Power Plan is 

finalizdd and implemented. 

Norman C. Bay 

Chai, an 

~~~C/· 

Cheryl k. LaFleur 

Commjssioner 

ColetteiD. Honorable 

Commissioner 

Sincerely, 

Philip D. Moeller 

iL T:4rk 

Commissioner