DOE’s coal fight keeps focus on ‘national security’

Source: Rod Kuckro, E&E News reporter • Posted: Monday, May 14, 2018

The Department of Energy is actively looking to identify key electric generating units that would be needed in a national emergency, Bruce Walker, DOE’s assistant secretary for electricity delivery and energy reliability, said yesterday.

“DOE’s role is very straightforward. It’s national security,” he said, speaking to the board of trustees of the North American Electric Reliability Corp. (NERC). “My day-to-day life is spent on national security.”

NERC as the chief reliability watchdog and the Federal Energy Regulatory Commission as the economic regulator for interstate pipelines and transmission have very different roles than DOE, Walker said.

“We just approach it from a different vantage point,” he said.

The “it” is the question of whether and how the federal government should encourage financial support to coal and nuclear plants operating in the East that cannot earn money in today’s electricity market.

In late March, FirstEnergy Corp.’s generating subsidiary made a formal request for DOE to use its authority under Section 202(c) of the Federal Power Act to declare a grid emergency and direct subsidies to unprofitable coal and nuclear plants.

The question also is tied to FERC’s inquiry into how to ensure the electric grid is resilient enough to handle a major disaster. According to DOE officials, resiliency means valuing large coal and nuclear plants because of their on-site fuel supplies. FERC commissioners aren’t so sure.

Walker cited the so-called FAST Act of 2015 as driving DOE’s work. That law directed DOE to “identify what the defense-critical electric infrastructure was in the United States. Unfortunately, that wasn’t done in 2015 as was required by the law,” Walker said.

Now that DOE has “defined” that infrastructure “we are working continuously on a day-to-day basis to find those assets that will be required when and if the bell rings to make sure that we have the capabilities to keep the country up and running,” Walker told the NERC board.

Richard Glick, a FERC commissioner since November, also addressed the NERC board.

“Conceptually, I think it makes a lot of sense to be concerned,” he said. Most people would agree, he said, that the U.S. will see more extreme weather events.

“It’s worthwhile to take a look at this issue on an in-depth basis,” he said, noting that Wednesday was the deadline for parties to submit to FERC response comments to the agency’s January request that regional grid operators answer a series of questions on resilience.

The FERC inquiry is an alternative to a DOE demand last year that the commission issue a proposed rule to allow for the subsidies. FERC unanimously rejected that request by Perry.

“But I’m increasingly concerned that we’re headed in another direction,” Glick said.

Glick added that he’s concerned the resilience proceeding at FERC and proposals for DOE to use the Federal Power Act or the Defense Production Act are all aimed at subsidizing older coal and nuclear plants that aren’t able to compete in a market dominated by lower-cost natural gas generation and renewable energy.

“I’m familiar with both of those statutes,” Glick said. DOE invoked both when he worked for Energy Secretary Bill Richardson “in a true emergency situation during the California energy crisis.”

Older plants, mostly coal plants, “are just not doing as well economically,” he said.

“I haven’t seen significant evidence that suggest that somehow we need to protect certain types of electric generation if they’re disadvantaged from an economic perspective,” Glick said.

On Wednesday, the attorneys general of Massachusetts, Connecticut, Illinois, Maryland, North Carolina, Oregon, Rhode Island, Virginia, Washington, and the District of Columbia requested that Energy Secretary Rick Perry turn back FirstEnergy’s request for aid.

Perhaps foreshadowing grounds for litigation if Perry were to act favorably for FirstEnergy, the attorneys general said a conclusion that FirstEnergy faces an emergency and therefore should get federal help “would be unlawful” and “would undermine competitive regional power markets, burden customers with excessive costs, undercut state energy laws and policies, and exacerbate pollution and public health harms.”

Tom Farrell, CEO of Dominion Energy Co., opened the NERC board session with a welcome message that included a strong defense for natural gas as the cleanest fossil fuel and a future generation fleet of carbon-free nuclear and renewables.

“Our company believes that some form of power station carbon regulation is virtually assured,” Farrell said.

He cited the work by Virginia’s environmental regulators to “quickly fill the gap left by the apparent demise of the Clean Power Plan,” the Obama administration’s landmark program to force states to cut their carbon dioxide emissions from power plants.

Specifically, Farrell said he expects the state will join the Regional Greenhouse Gas Initiative, a nine-state, cap-and-trade program.

“Transition to a lower carbon generating fleet is inevitable,” he said, explaining why “we believe [natural gas] is a critical part of a solution.”