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Grid Reliability in the Electric Era
Macey, Joshua C. Welton, Shelley Wiseman, Hannah
Macey, Joshua C.
Welton, Shelley
Wiseman, Hannah
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Abstract
The United States has delegated the responsibility of keeping the lights
on to a self-regulatory organization called the North American Electric
Reliability Corporation (NERC). Although NERC is a crucial example of
industry-led governance—and regulates in an area that is central to our
economy and basic human survival—this unusual institution has received
scant attention from policymakers and scholars. Such attention is overdue.
To decarbonize its economy, the United States must enter a new “electric
era,” transitioning many sectors to run on electricity while also transforming
the electricity system itself to run largely on clean but intermittent renewable
resources. These new resources demand new approaches to electric grid
reliability—approaches that NERC is failing to adequately embrace.
This Article traces NERC’s history, situates NERC in ongoing debates
about climate change and grid reliability, and assesses the viability of
reliability self-regulation in the electric era. A self-regulatory model for
maintaining U.S. electric-grid reliability sufficed in prior decades, when
regulated monopolies managed nearly every segment of electricity
production. But the criteria that NERC once used to justify self-regulation—
’ expertise, clear accountability metrics, and public-private
alignment of interests—no longer hold. The climate crisis creates a need for
expertise beyond NERC’s domain, while the introduction of competition in
the electricity sector blurs lines of accountability for reliability failures.
NERC’s structure also perpetuates an incumbency bias at odds with public
goals for the energy transition.
These shifting conditions have caused to fail to keep pace with the
reliability challenges of the electric era. Worse still, outdated NERC
standards help entrench fossil-fuel interests by justifying electricity-market
rules poorly suited to accommodate renewable resources. We therefore
suggest a suite of reforms that would increase direct government oversight
and accountability in electricity-reliability regulation.