FERC chairman takes heat for comments on coal, nuclear

Source: Sam Mintz and Hannah Northey, E&E News reporters • Posted: Wednesday, August 16, 2017

The new Federal Energy Regulatory Commission chairman’s comments on coal and nuclear power on an agency podcast this week have sparked criticism from watchdog groups that say the FERC leader is opening the door to politics at the agency.

In an interview on FERC’s “Open Access” podcast, Chairman Neil Chatterjee said coal and nuclear energy — “baseload” power sources — should be “properly compensated,” emphasizing coal’s importance to his home state, Kentucky, and to the country’s fuel mix (E&E News PM, Aug. 14).

Tyson Slocum, director of Public Citizen’s energy program, called Chatterjee’s comments “bizarre.”

“I’ve never met him and haven’t interacted with him, but he was described to me … as being smart and thoughtful and knowledgeable,” Slocum said. “This interview does not convey that. He does not know fundamental basics of the Federal Power Act or his duties as chair.”

Slocum and Jennifer Chen, an attorney with the Natural Resources Defense Council, said FERC’s mandate to ensure that rates are “just and reasonable” prohibits showing a preference for one power source over another.

“FERC is legally required to ensure that market rules do not unduly discriminate between resources and do not impose unreasonable costs on consumers,” Chen said. “If FERC were to single out coal and nuclear resources and suggest they have some benefit that ought to be paid for by consumers, that would turn what FERC is supposed to do as a rational decisionmaker upside-down.”

The agency, she said, must first identify a problem, then define services to fix it and let all resources capable of meeting those demands compete.

“There has been no demonstration of a reliability or resiliency issue to begin with or definition of a necessary new service that baseload coal and nuclear are able to provide that fuel-free or flexible resources like renewables or demand response cannot,” she said.

Said Slocum, “Vested interests are saying, ‘Please compensate us for our failed investments.'” But nonvested interests, he said, are largely asking, “Why are we talking about subsidizing inefficient generation?”

Chatterjee declined to be interviewed for this story through a FERC spokesman.

Former FERC Chairman Jon Wellinghoff said FERC has to ensure that all resources participating in the markets are adequately compensated for the value they provide, and pointed to Order 755, which requires grid operators to create a program to reward technologies like batteries and flywheels that respond quickly to system changes.

But Wellinghoff questioned the use of the term “baseload” and whether a similar value-added case has been made for aging coal and nuclear plants that have been closing across the country. He said he’s open to studies that show nuclear and coal plants provide an uncompensated value, but said he has yet to see them.

“If in fact someone can find some value for inflexible resources like a coal plant or a nuclear power plant, if there’s some added value there, then that needs to be recognized,” Wellinghoff said. “I’m not aware of that, I’m not aware of that added value, but I don’t have a problem with someone saying, ‘We need to determine if there is or isn’t.'”

The Energy Department is working on a study about grid reliability and baseload power, which some activists have worried will be used as an excuse to attack renewable energy sources.

Wellinghoff expressed confidence in FERC’s fairness in addressing energy sources. “I think there are adequate checks and balances to ensure there isn’t discrimination, and I don’t assume FERC will engage in discrimination,” he said. “But I think if there were, we’d certainly see it go through the courts, and the courts would do their job.”

Coal industry groups praised Chatterjee’s comments.

“His emphasis on coal’s contribution to grid reliability I think reflects the American public’s preference for responsible policy over ideological zealotry. It also reflects the facts, as [the U.S. Energy Information Administration] forecasts that coal’s importance is not waning,” said Luke Popovich, a spokesman for the National Mining Association.


Slocum also expressed concern that Chatterjee’s comments point to a “politicization of FERC” under President Trump.

While the president’s party traditionally holds a 3-2 majority on the commission, the agency has historically been nonpartisan and independent from the political leanings of the White House.

“The chairman was echoing parts of Trump’s agenda that have nothing to do with statutory FERC responsibilities,” Slocum said.

He pointed to this statement from Chatterjee: “I’m also looking forward to following the president’s charge to create jobs and stimulate economic growth through infrastructure. I believe working through the backlog — especially evaluating the infrastructure projects before the commission — really could help spur economic development.”

That sentiment has no relation to FERC’s duties or role, Slocum said.

“Where in the Federal Power Act does it say that? He is inventing new responsibilities and obligations to review these projects,” Slocum said. “He has no business examining the job creation and economic development of infrastructure projects. They are there to ensure that all rates for gas infrastructure projects are just and reasonable and that the construction of those facilities is consistent with their obligations for environmental reviews. That’s it.”

Reporter Rod Kuckro contributed.