With summer well underway, the nation’s leading grid regulator, the North American Electric Reliability Corporation (NERC), just released a troubling new report indicating that significant portions of the United States are at risk of energy shortages and rolling blackouts. Should such blackouts occur, the impact on Americans daily lives could be devastating. At the heart of the issue is high energy consumption during the summer months and an anticipated capacity shortfall due to the premature closure of various coal and nuclear plants.
While Americans always use more energy to escape the heat, there is usually plenty of energy in reserve. However, over the last few years, policymakers at both the federal and state level have enacted new laws designed to reduce U.S. carbon emissions and American reliance on fossil fuels. These efforts have, at least in part, led to the early retirement of numerous coal plants previously used to help meet America’s energy needs. Even nuclear plants have not been spared, despite producing zero carbon emissions.
Unfortunately, policymakers have repeatedly failed to heed the warnings of energy regulators who have for years sounded the alarm that coal and nuclear plants are being decommissioned faster than new energy sources can be identified. Similarly, legislators have consistently ignored the concerns of regulators that fear many of these new energy sources, like solar and wind, are intermittent forms of energy that are less reliable than traditional energy sources, and subject to external forces like weather and time of day.
The new NERC report provides a prime example of just how serious the issue has become.
The report, which was released in May, identified several areas of concern regarding the reliability of the U.S. electrical grid. It found that a large chunk of the Midwest, which is overseen by the Midcontinent ISO (MISO) and includes states like Illinois, Michigan, Minnesota, and Wisconsin, faces a particularly high risk of capacity shortfall. The region is expected to have 2.3% less generation capacity this summer than last. The western half of the country also faces an elevated risk of exhausting energy reserves during “above-normal conditions.” Extreme weather events like prolonged periods of hot weather, wildfires, and droughts, as well as supply chain issues, may lead to blackouts for large swaths of the country.
This is bad news for anyone living in these areas, as residents are likely to have to cope with unpleasant living conditions during the hottest months of the year.
Energy shortages also lead to higher prices for consumers. Indeed, according to the Energy Information Administration (EIA), U.S. energy prices jumped 4.3% in 2021, representing the largest annual increase in nominal electricity expenditures in over a decade. Utility bills for customers increased by $5 a month to an average of $122. Those numbers are only expected to rise in the months ahead. As the New York Times recently noted, the EIA predicts “rates a year from now will average about 15 cents a kilowatt-hour, or $150 a month for the typical household.” That is $28 less per month families will have to spend on other important items like food and gas. Additional expenditures such as these quickly add up and can be a considerable financial obstacle for families living paycheck to paycheck. The NERC report should be a wakeup call to policymakers everywhere who have been slow to adjust to a quickly changing energy landscape. While transitioning to renewable energy is admirable, policymakers and regulators must be careful to not enact laws that harm the energy market and reduce the nation’s reliability to generating energy capacity until there is an adequate replacement available. To do otherwise risks creating an artificial energy shortage that drives up energy prices for consumers, and in the worst cases, leads to rolling blackouts.