FERC began accepting comments Monday on the Department of Energy's (DOE) proposal to provide reliability and resiliency compensation to coal and nuclear baseload generators, with the Commission targeting a much quicker turnaround than opponents had wanted.
The Federal Energy Regulatory Commission said it would accept comments on the proposed rulemaking through Oct. 23 [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 should follow "a deliberative process that considers stakeholder input as it determines whether or how to move forward with a rulemaking," the groups said. Instead, FERC appears to be targeting a timetable even more aggressive than what DOE called for in last week's Notice of Proposed Rulemaking (NOPR).
Citing reliability and resiliency, DOE Secretary Rick 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.
Perry asked FERC to conclude the public comment period for the proposed rulemaking within 45 days and to take final action within 60 days, a timeline analysts already viewed as condensed. ClearView Energy Partners Managing Director Christi Tezak told NGI that "such a massive departure from current approaches -- notwithstanding the large record DOE implies is already at the Commission -- looks to be something that isn't going to be fully completed within 60 days."
Coal has seen its once-dominant share of the power stack slip in recent years amid competition from natural gas and renewables, leading to retirements of baseload generating units.
Interim FERC Chairman Neil Chatterjee said during a podcast interview shortly after his swearing-in in August that he's "committed to the resilience and reliability of our electric system. These are essential to national security, and to that end I believe baseload power should be recognized as an essential part of the fuel mix.
“I believe that generation, including our existing coal and nuclear fleet, need to be properly compensated to recognize the value it provides to the system...As a nation, we need to recognize that coal, along with gas and renewables, continue to be part of our diverse fuel mix."
Chatterjee, nominated earlier this year by President Trump, is a native of Lexington, KY, and previously served as an energy policy adviser to Senate Majority Leader Mitch McConnell (R-KY).
An Unlikely Alliance
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.
CEO Paul Bailey of the American Coalition for Clean Coal Electricity and CEO Maria Korsnick of the Nuclear Energy Institute joined Steve Wright of the National Hydropower Association to express support for the proposal, with some caveats.
Meanwhile, American Petroleum Institute’s Marty Durbin, executive vice president, was joined by the Natural Resources Defense Council’s John Moore and representatives of the wind, solar and energy storage industries in opposing DOE’s proposed rulemaking.
Opponents warned of potential market distortion and told lawmakers that regulators should focus on the services that are essential to reliability and resiliency rather than on specific fuel characteristics.
Referencing instances where coal and nuclear plants have experienced outages recently because of weather events, Moore said, “The key question is whether massive subsidies of the type that the DOE proposes for the grid would have made any of these power plants more reliable or resilient and better able to withstand natural forces. No. It actually might have made the problem worse by undermining markets and freezing out other equally reliable and less costly resources.”
Durbin emphasized the flexibility that natural gas brings to the table, along with reliability and resiliency. The NOPR is inconsistent with DOE’s grid reliability studypublished in August, he said.
Bailey, on the other hand, lamented “market subsidies and market rules that do not properly value the reliability of the coal fleet...Although we’re still evaluating it, the proposal represents a major step toward achieving at least some reforms in the wholesale market.” The NOPR “must be adopted quickly” in order to “prevent premature coal retirements.”
Korsnick said the nuclear fleet “is in clear and present danger” unless regulators take action to address the current market design.
For his part, asked for an up or down vote on the NOPR, Wright said, “No on the process, yes on the substance. I think it’s a good idea to address price formation.”
Wright was not alone in his concerns that DOE is moving too quickly with the NOPR, with most witnesses suggesting the 60-day period to collect comments and develop a rule isn’t enough time.
Korsnick said the process needs to “allow for the appropriate conversation to play out but by the same token there is a sense of urgency,” while Bailey said the process “needs to be done very, very quickly.”
Said Moore, “If I were king, I’d probably put it in the trash can, because I don’t think it meets minimum standards of due process in the Administrative Procedure Act.”