FERC: Bailout 2.0?

Source: BY KELSEY TAMBORRINO, Politico • Posted: Sunday, February 23, 2020

BAILOUT 2.0? Two years ago FERC rejected a bailout plan from the Energy Department for struggling coal and nuclear power plants. Now, the energy regulators are altering the rules for regional electricity markets that experts say will be far more effective in keeping struggling fossil fuel plants open, Pro’s Gavin Bade and Marie J. French report.

On Thursday, FERC’s three commissioners voted 2-1 to approve changes to power market rules in New York that will limit wind and solar power’s participation in the state’s capacity market. It marks the third time in recent months that FERC has moved to tilt capacity market rules to benefit coal, gas and oil-fueled generators.

Analysts say that setting those price floors in New England, the Mid-Atlantic and now New York for subsidized resources will likely make them uncompetitive in the capacity market auctions, clearing the field for the fossil fuel plants that remain. Those same regions also happen to be where DOE had sought to intervene with its failed 2017 grid resilience proposal.

Chairman Neil Chatterjee rejected any connection between the DOE plan floated by then-Secretary Rick Perry and the more recent market reforms, saying there are “dramatic differences” between the proposals and “people [are] trying to connect threads that aren’t there.” The real intent behind the price floors, he said, is to create a “level playing field” in capacity markets by taking into account the state-level subsidies for renewables.

But critics say the changes are effectively a bailout by another name. Senate Minority Leader Chuck Schumer said in a tweet that “FERC has become a wholly-owned GOP subsidiary, doing the bidding of the biggest polluters.” And many power market watchers expect the new price floors will end up boosting coal, oil and gas generators more than the flawed DOE plan. The price floors are “much more intelligently constructed than the [DOE’s Notice of Proposed Rulemaking],” said Sonia Aggarwal, vice president of the research firm Energy Innovation, which promotes clean energy. “That fact alone probably means it will be more effective at floating uneconomic coal.”