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DOE's Grid Resiliency NOPR Target of Sharp Criticism at House Subcommittee Hearing

All six witnesses at a House Committee on Energy and Commerce subcommittee hearing Thursday said they oppose for both process and substance reasons the Department of Energy's (DOE) recent proposal to provide reliability and resiliency compensation to coal and nuclear baseload generators. Several subcommittee members were sharply critical of the proposal as well.

The topic for the Subcommittee on Energy hearing was "consumer-oriented perspectives on improving the nation's electricity markets," but DOE's Notice of Proposed Rulemaking (NOPR) dominated the conversation between elected officials and a panel of consumer advocates.

The "bizarre" NOPR "is about accommodating and prioritizing these inefficient baseload nuclear and coal generation units," said Tyson Slocum, director of Public Citizen's Energy Program. "You don't have take my word for it that there's no crisis of reliability from the retirement of nuclear and coal plants. That's what the North American Electric Reliability Corporation has concluded, that's what the Department of Energy's own August staff report [concluded] -- that there is no reliability crisis, that in fact we're seeing resiliency and reliability benefits from the energy transition that we're seeing to renewables and lower demand."

"The Department of Energy proposal is terrible, and I don't think anyone likes it, except for those entities that have economic vested interests in the uneconomic nuclear and coal-fired power plants. Public Citizen is on the same side of this interest as the American Petroleum Institute, [and that] is probably the first time in history that has happened."

"We are dead set against this proposal," said CEO John Hughes of Electricity Consumers Resource Council (ECRC). "We believe that it will destroy the ISO [independent system operator] and RTO [regional transmission organization] markets. If not, it will destroy competition in those markets. The attempt here is to create a big ATM machine for uneconomic, obsolete coal and nuclear plants."

A plan to have the Government Accountability Office assess ISOs and RTOs, which was included in an energy bill (HR 8) previously approved by the House, would be a better path to follow, Hughes said.

"It's our view that subsidizing particular technologies, uneconomic technologies, is not necessary to make the grid more reliable," said Joseph Bowring, independent market monitor for PJM Interconnection. "The grid has been reliable and resilient, and continues to be that way as a result of competitive markets."

On the House side of the dais, ranking subcommittee member Bobby Rush (D-IL) criticized the NOPR, which he said would have regulators "picking winners and losers, and placing the interests of select industries above the public interest."

Rep. Frank Pallone (D-NJ) was more blunt, calling it Energy Secretary Rick Perry's “ill-conceived and wholly unjustified effort to commandeer the Federal Energy Regulatory Commission's rulemaking process to provide unduly preferential and discriminatory rates to coal and nuclear generators.

"If adopted by FERC, it will certainly result in increased costs to consumers with no significant benefit, and it will mark the beginning of the end of competitive electricity markets. I understand the concern around closure of non-economic coal and nuclear power plants...however, Secretary Perry's proposal represents an unprecedented attempt to usurp policy making functions that belong to congress and the states.

“His proposal is not about regulation and markets, which is what the Federal Power Act tasks FERC with. It's about subsidizing certain players in the electricity market at the expense of consumers and other generators, who compete against the fuel types favored by the rule. Regardless of whether you believe that it is a useful or harmful proposition, it's clearly a policy change that is far outside of FERC's purview."

And the potential fallout from DOE's NOPR has at least one member of FERC worried. "The most colorful description I've heard came from our new FERC Commissioner Robert Powelson," said subcommittee chairman Pete Olson (R-TX). "He said, regarding concerns that the new rule does undo competitive markets, 'When that happens, we're done. I'm done.' Wow -- that's pretty strong."

Citing reliability and resiliency, Perry last week directed FERC to develop a proposed rule to allow cost-recovery for electric generating units that have a 90-day on-site supply of fuel. The move has been widely interpreted as a potential thumb on the scales favoring coal and nuclear power plants, especially given the Trump administration's pro-coal rhetoric.

FERC began accepting comments Monday on DOE's proposal, hinting at a much quicker turnaround than opponents had wanted [RM18-1]. The notice coincided on the same day that a coalition of oil and gas and renewable energy groups including the American Petroleum Institute, the Interstate Natural Gas Association of America and the Natural Gas Supply Association called on FERC to hold a comment period of at least 90 days.

FERC Commissioner Cheryl LaFleur said this week she hopes the Commission receives many public comments over DOE's proposal.

"I hope we get a lot of comments," LeFleur told attendees of the North American Gas Forum in Washington, DC on Tuesday. "I think we will. I'd like them to be focused on this proposal. We don't have to cover the whole landscape of everything in markets in 20 days. We already have a huge record of thousands of pages of comments on related issues in our price formation dockets."

The NOPR has created an unlikely alliance between natural gas and renewables advocates, who on Tuesday joined in opposition to the proposal during testimony before the House Energy and Commerce Energy subcommittee.

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