THE POLITICAL WEATHER REPORT FOR THE ELECTRICITY GRID

Photo by Matthew Henry on Unsplash

                                                                                                                          

For people working on the US electricity grid, or just planning and re-planning said grid, elections are like weather for farmers. Elections (like weather) are there to be complained about. Then the grid tribe must get back to adapting their jobs to the election outcome. As it is with farmers and the weather.

Even so, farmers listen to weather reports and grid people follow political news. OK, according to Oddschecker, an election betting site, the November Presidential election odds favor Joe Biden and the Democrats. That is not a sure thing, just the current line. I don’t know the outcome, and I don’t know who will control the House or the Senate. I would be willing to bet $5 (once) that there will be split control of the elected parts of the Federal government, but that $5 would be better spent on a latte at a premium coffee shop.

But really, that’s the standard news, not the useful part of an electric grid political weather report. The grid politics follow their own tracks and timetables.

If Biden is re-elected and the Democrats run the table in Congress, the Administration’s 2021 bipartisan infrastructure law and the 2022 Inflation Reduction Act get another year or two to play out the planned spending and regulatory implementation. Most of the government spending authorized under these laws hast not yet happened. As everywhere and always, plan execution is hard, and DC works in slow-mo.

Biden vs.Trump

If Trump is elected and has support in Congress, then the new Administration and its allies on the Hill will try to cancel the Biden initiatives. Team Trump would use the budget “savings” to pay for keeping the Trump 2021 tax package in place.

You decide which approach you’d prefer. Depends on your company’s positioning and your tax bill.

Then there’s the new FERC transmission permitting reform/national “corridor” rule. Applause. But the FERC, while “powerful” in DC terms, is not as important as farmers, homeowners, and local lawyers near proposed rights-of-way. Those people are motivated and know the territory better than anyone. They have more voters than all the people reading this. Forecast: extended delays. You might call it a “ground stop”.

We are told that power generation construction choices, i.e., gas fired, coal fired or renewables, will be driven by the EPA’s new power plant final rules. Briefly, EPA likes renewables, hates coal, and is temporarily almost tolerant of gas, but not really.

However, I am led to understand that coal and gas companies employ lawyers who intend to block the EPA plan at the appellate court level. First the DC Circuit Court of Appeals, and then, depending on whether the breaks go to the Republicans/fossil side or the Democrats/renewables side, appeal the results to the Supreme Court. Supremes go 5-4 with the fossil/Republicans.

But what do I know? Pay the lawyers on both sides so you can turn the page, or, if you prefer, push the rinse-and-repeat cycle button for a redo of the outcome of the Obama Clean Power Plan.

The Navajo Generating Station, a coal-fired power plant outside Page, Arizona

Then, there’s the coming “Chevron” earthquake.

For whatever normies are reading this, “Chevron Deference” is the short name for a Supreme Court decision from 1984  that says when Federal Courts have to decide on gaps or ambiguities in Federal law, they should defer to the technical judgement of experts in Federal agencies.

Gaps and ambiguities are what Congress does, of course. And that’s where DC law firms, lobbyists and other members of The Swamp make their money.  The original Chevron” decision was against liberal environmentalists challenging a Republican EPA director. So, liberals used to hate “Chevron”.

No, not the oil company, the “Doctrine”

Now they love it. It means that the permanent staff of Federal agencies, particularly the EPA but now also the FERC have even more authority than they used to, and usually Democrats and liberals generally are very good at bureaucratic warfare.

Conservatives originally liked it, but now they hate it with a passion that burns with a white-hot flame. On principal they think that this power leads to an overreaching, even dictatorial administrative state.

Also, their friends in the fossil fuel trade always have a problem with the EPA of some kind, so the first term of any Democratic Administration will always be hard for them.

Anyway, “Chevron” is on course to be overturned by the Supremes by June of this year. There will be much election year moaning by the liberals and jubilation by the conservatives, and a huge boost to election year fundraising for both groups.

OK, I hear you say, but so what’s in this for the power trade, particularly now when there are so many real worries?

The short version is that the end of “Chevron” will be hard on the renewables sector and a win (or reprieve) for fossil generally and coal (in particular).

The most immediate effect will be in the MISO, which, according to  NERC MAY 2024 Summer Reliability Assessment, is actually the highest risk part of the North American grid. I know, you would have thought California, but no. Not yet.

The ah, technical issue is that MISO has a lot of nameplate wind and solar power, but not enough of the dispatchable variety. Getting the copper, cobalt, nickel and so on for the required transmission and storage would take a staggering amount of mine opening. Maybe later.

And that’s the power grid political weather. News at 11:00.