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FERC Staff Has Pointed Questions for DOE NOPR Commenters

FERC staff is asking commenters to answer a series of questions -- some of them pointed -- to help staff understand the implications of the Department of Energy's (DOE) proposal to provide reliability and resiliency compensation to coal and nuclear baseload generators.

Commenters on DOE's Notice of Proposed Rulemaking (NOPR) are requested to address the 30 questions but do not have to answer them all, and may raise other issues, according to staff of the Federal Energy Regulatory Commission [RM18-1].

The questions fall under four main headings: need for reform, eligibility, implementation, rates, and other. They run the gamut from the most basic ("What impact would the proposed rule have on consumers?") to the complex, including a 61-word question about technical capability of eligible units.

DOE Secretary Rick Perry has said the proposed Grid Resiliency Pricing Rule was prompted by lessons learned from the experiences of the polar vortices of 2014 and hurricanes Sandy, Harvey, Irma and Maria. FERC staff asks if commenters agree that the NOPR is needed in response to the polar vortex and hurricanes.

Another question asks if commenters "agree with the proposed rule's characterizations of these events? For extreme events like hurricanes, earthquakes, terrorist attacks, or geomagnetic disturbances, what impact would the proposed rule have on the time required for system restoration, particularly if there is associated severe damage to the transmission or distribution system?"

Under DOE's proposed rule, FERC would "exercise its authority under sections 205 and 206 of the Federal Power Act, to establish just and reasonable rates for wholesale electricity sales." FERC would impose rules on independent system operators (ISO) and regional transmission organizations "to ensure that certain reliability and resilience attributes of electric generation resources are fully valued."

The rule would allow "for the recovery of costs of fuel-secure generation units that make our grid reliable and resilient," according to Perry. Eligible units would have to "be able to provide essential energy and ancillary reliability service and have a 90-day fuel supply on site in the event of supply disruptions caused by emergencies, extreme weather, or natural or man-made disasters."

The NOPR 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.

"The proposed rule references the retirement of coal and nuclear resources and a concern from Congress about the potential further loss of valuable generation resources as a basis for action," staff said. "What impact has the retirement of these resources had on reliability and resilience in RTOs/ISOs to date? What impact on reliability and resilience in RTOs/ISOs can be anticipated under current market constructs?"

The NOPR defines eligible resources as having 90-day fuel supplies on site. "Is there a direct correlation between the quantity of on-site fuel and a given level of resilience or reliability?," staff asks commenters.

FERC began accepting comments on DOE's proposal Oct. 2, hinting at a much quicker turnaround than opponents had wanted. 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 has said she hopes the Commission receives many public comments over DOE's proposal.

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. On Thursday it was sharply criticized by members of the committee and a panel of consumer advocates.

Energy groups, including the Natural Gas Supply Association, the Interstate Natural Gas Association of America and the American Petroleum Institute, have also come out against the NOPR.

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