Comments on grid rule hit FERC as buzzer sounds
The rulemaking stems from a September Department of Energy proposal that could result in major changes to the way electricity markets operate in the United States.
The goal is to increase grid resilience by compensating power plants that maintain a 90-day supply of fuel on-site — effectively helping prop up suffering coal and nuclear plants.
Outside of coal and nuclear, and smaller sectors or regions that benefit from the success of those industries, feedback has largely been negative (Greenwire, Oct. 17).
Opponents have said the proposal would wreck decades of progress in creating competitive electricity markets, would raise costs for consumers and would unfairly prop up uneconomical plants — all for an ill-defined goal.
Grid operators, utilities
PJM Interconnection, one of the seven U.S. grid operators under FERC — and one of only a few that would be affected by the proposal — said it thinks FERC should reject the DOE plan.
“Some of the concerns raised by DOE we certainly agree with and support a need for action,” said PJM CEO Andrew Ott on a call with reporters today.
“However, the DOE proposed remedy simply is unworkable,” Ott said. “We will express to the commission some of the very fundamental problems with it. We believe it’s contrary to law and will not really solve any problems.”
Entergy Corp., a major utility that operates plants with nearly 10,000 megawatts of nuclear capacity and 2,200 MW of coal, weighed in with an essentially neutral filing, asking FERC to be cautious as it develops a final rule.
The company told the commission it should preserve the benefits of competitive markets, recognize regional differences and allow plenty of time for grid operators to meet the requirements of any final rule it puts forward, but declined to say whether it thinks the agency should finalize DOE’s proposal.
FirstEnergy Corp., a major coal-heavy utility, has pushed hard in support of the proposal, sending comments of its own and gathering submissions from other local organizations.
Coal group cheers, Exxon and Tesla jeer
A number of coal groups wrote in support of the rule, which they say would help save jobs and prevent further plant retirements, something boosters see as detrimental to American energy stability.
“Adoption of this rule will sustain the long-term viability of critical coal-fired power plants while preserving jobs and economic enhancements of the coal mining industry in Ohio and elsewhere, whose production provides for the continued operation of those generating stations,” wrote the Ohio Coal Association.
Big oil and gas companies, however, have found themselves lined up in an unlikely alliance with the renewable energy lobby in opposing the rule.
“The Proposal would increase costs for consumers, discriminate against natural gas (as well as other power generation sources), and unravel the competitive market structure that FERC has promoted for two decades,” wroteExxon Mobil Corp. today.
“Because of the significant negative impacts such a rule could have on the future of competitive markets, consumers, and the natural gas industry, we urge you to reject the Proposal.”
Also opposing the idea was Tesla Inc.. While best known for its electric vehicles, the company works on energy storage systems.
Analysts
An analysis from the consulting firm Rhodium Group submitted to FERC found that issues with fuel supply — the primary factor in DOE’s plan — were responsible for only 0.00007 percent of lost electric service hours in the U.S. between 2012 and 2016.
Further, the group found that having more coal and nuclear plants does not necessarily lead to more reliable service for utilities.
“Increasing amounts of coal and nuclear generation on a utility’s system has no clear relationship with higher performance regarding reliability metrics. Furthermore, increasing amounts of variable renewable generation on a utility’s system has no clear relationship with lower performance regarding reliability metrics,” said Rhodium’s paper.
The finding challenges a key assumption behind DOE’s proposal: that continuing retirements of coal and nuclear plants will threaten the grid’s reliability.
What’s next?
Reply comments are due by Nov. 7, and the agency has promised to announce its next move within a compressed timeline set by DOE, which would mean a decision is due by Dec. 11.
FERC Chairman Neil Chatterjee told reporters earlier this month the commission has many options for what to do next. It could initiate a new notice of proposed rulemaking, extend the comment period, convene technical conferences or initiate Federal Power Act Section 206 review proceedings (Greenwire, Oct. 13).