House Subcommittee to Examine Regional Grid Reliability

WASHINGTON — The House Subcommittee on Energy will hear from regional grid operators on Tuesday on the challenges they face as the nation demands ever more power and how they plan to address them.

The hearing, which is scheduled to begin at 10:15 a.m. on Tuesday and is titled “Keeping the Lights On,” is being held in room 2123 of the Rayburn House Office Building.

Among the issues expected to be discussed are the specific hurdles the regional transmission and independent system operators, the wholesalers who cover two-thirds of the country, are encountering in each of their respective service areas.

They’re also sure to be asked about the impact of state and federal public policy decisions; the challenge of meeting the growing demand for power from artificial intelligence, manufacturing and electrifications; and the reliability risks of prematurely retiring key elements of grid infrastructure.

Heading into the hearing, it’s no secret that regional transmission and independent system operators are feeling an intense amount of pressure to meet their markets’ needs.

Increasingly, a number of them are warning customers of potential electricity disruptions and asking that consumers do what they can to conserve power.

Currently, some regions do not have enough reliable, dispatchable generation to produce the electricity required to maintain reliable operation of the bulk power system. 

PJM, the nation’s largest wholesale market, recently warned that it could see a capacity shortage as early as 2026 or 2027 and identified public policies, permitting constraints and supply chain challenges as key trends that are tightening supply-demand balance within the system.

Over the next 10 years, 115 GW of generation has been announced to be retired across the United States.

In 2025 alone, electric generators plan to retire 12.3 GW of coal capacity, a 65% increase in retirements compared to 2024.

Absent sufficient replacement of generating resources, reliability risks will continue across the nation — even during normal peak demand, according to a report compiled by committee staff ahead of the hearing.

The witnesses at the session are expected to include Gordon van Welie, president and chief executive officer of ISO New England; Richard Dewey, president and chief executive officer of  New York Independent System Operator; Manu Asthana, president and chief executive officer of PJM Interconnection, LLC; Jennifer Curran, senior vice president for planning and operations at Midcontinent ISO; Lanny Nickell, chief operating officer at Southwest Power Pool; Elliot Mainzer, president and chief executive officer of California Independent System Operator; and Pablo Vegas, president and chief executive officer of the Electric Reliability Council of Texas, Inc.

For most of us, the nation’s grid system appears to be little more than a power line extending from one utility pole to another.

In reality, the nation’s electric power system is an assembly of multiple large networks of high-voltage transmission lines, generating resources, local distribution lines, and other critical infrastructure to ensure the physical delivery of adequate and reliable supplies of electricity. 

The success of this complex system is entirely dependent on real-time communication and coordination between the grid operators and the many entities that participate in its wholesale markets, including generators, transmission owners, energy traders, marketers, demand response providers, and others.

Beginning in the late 19th century, the electricity system in the United States consisted of scores of vertically integrated utilities who handled all aspects of generation, transmission and distribution.

However, beginning in 1992, with the passage of the Energy Policy Act, that system began to change.

The industry deregulation that began with the act and continued through subsequent Federal Energy Regulatory Commission orders, opened transmission access to other wholesale power producers, and many regions of the country created competitive markets for wholesale power — the very RTOs and ISOs that are the focus of Tuesday’s hearing.

Each regional transmission and independent system operator is charged with overseeing the nation’s wholesale electricity markets, managing the day-to-day operations of its respective transmission systems, and offering a market to purchase products including energy, capacity, ancillary services and financial transmission rights. 

In addition to operating the real-time and day-ahead electricity markets, each of these RTOs and ISOs are responsible for longer-term resource adequacy forecasting and transmission planning to ensure continued reliability.  

The regions that are not in RTOs/ISOs, generally the Southeast, Southwest and Northwest, have remained in traditional wholesale electricity markets where utilities are responsible for grid operations and management as well as providing electricity to consumers. 

These traditionally regulated utilities are primarily regulated by their respective state public utility commissions and may voluntarily participate in non-RTO/ISO market structures. 

For short-term grid reliability and resource scheduling in the markets, electricity is sold and purchased at a clearing price, generally on a day-ahead or real-time basis, the report prepared for the hearing explains.

This price is known as the “locational marginal price” and reflects the market price for electricity. It is composed of three elements: an energy charge, a congestion charge and a charge for transmission system energy losses. 

The transmission and independent system operators calculate an LMP at each location on its grid to reflect the marginal cost of serving demand (or “load”) at the specific location. 

All resources selling energy receive the LMP and all buyers pay that same market clearing price. Under this pricing mechanism, power sellers that offer prices lower than the clearing price still receive the highest clearing prices.

In addition to energy markets, several of the transmission and independent system operators also oversee capacity markets to provide longer-term revenues for power producers to ensure generation resources will be available, when needed, in the future. 

While operational models vary, the sale of “capacity” typically provides the buyer with the right to purchase the energy at a capped price to use at some point in the future. 

When the capacity obligation comes due in the future, the generator is required to make its output available.  

When seeking to add new generation resources to their transmission systems, each RTO and ISO requires developers to undergo a series of impact studies that identify the operational requirements for new resources to be added, as part of the interconnection process. 

In recent years, the committee report said, transmission and independent system operators have seen growing backlogs of interconnection requests — known as the interconnection queue — mostly from wind, solar or battery storage resources. 

The number of requests in the queue is not necessarily indicative of the generation capacity that will be added to the system. For example, in PJM, the historical rate for completing the interconnections of renewable resources has been 5%.

At the same time, PJM recently noted that the amount of generation awaiting interconnection is not sufficient to replace the retiring generation capacity, most of which is dispatchable baseload thermal generation.

Yet another essential function of the transmission and independent system operators is to maintain adequate reserve margins, ensuring obligations to deliver electricity are met when system disruptions occur, or when peak demand exceeds the obligated load.

Many of these operators are already predicting significant shortfalls in the years ahead.

According to the committee staff report, the retirement of dispatchable generating sources (for example, coal, natural gas and nuclear) and the increase in intermittent generation from wind and solar resources, has created reliability challenges. 

The North American Electric Reliability Corporation’s 2024 Long-Term Reliability Assessment found that a majority of the nation’s bulk power system faces mounting resource adequacy challenges. 

As NERC CEO Jim Robb observed during an appearance before the Senate Committee on Energy and Natural Resources in 2023, “In our hurry to develop a cleaner resource base, reliability and energy adequacy has to be taken into consideration.

“I know that operators and planners are working very, very hard to preserve reliability, but they’re continually asked to do so and manage your grid under more and more challenging conditions,” he added.

Dan can be reached at [email protected] and @DanMcCue