Governors' Wind Energy Coalition

Taking advantage of a second chance to drive their points home, energy companies and trade associations filed dozens of reply comments this week to the Federal Energy Regulatory Commission arguing their cases on the Energy Department’s controversial grid proposal.

Hundreds of comments were submitted to FERC ahead of a Oct. 24 deadline, and yesterday marked the end of a period for advocates to respond to those.

The DOE plan would change the rules in certain markets to compensate coal and nuclear plants as a reward for keeping a 90-day supply of fuel on site.

FERC, though, has asked for input from stakeholders to help guide its decision.

A number of trade associations representing a wide and varied group of energy technologies have argued the rule as written is unjust and possibly illegal.

The coalition, which includes the top renewable energy trade groups as well as oil and natural gas lobby leaders, reiterated that stance in its reply comment this week.

“The record in this proceeding, including the initial comments, does not support the discriminatory payments proposed in the DOE NOPR,” they wrote.

Central to their argument is FERC’s primary mandate to ensure “just and reasonable” rates for consumers and that the only way the proposal would be legal is if the commission could demonstrate that existing conditions have led to unjust and unreasonable rates.

“Such a showing has not been made and, thus, the proposed payments cannot be required by the Commission. While the undersigned support the goals of a reliable and resilient grid, adoption of ill-considered discriminatory payments contemplated in the DOE NOPR is not supportable — or even appropriate — from a legal or policy perspective,” the groups wrote.

But proponents of the rule also pushed back. FirstEnergy Corp., a coal-heavy utility that stands to benefit from the rule, restated its argument in a comment more than 300 pages long. It said immediate action is needed to save power plants necessary for ensuring grid resilience.

“A failure by the Commission to act now could cause an increase in total energy and capacity costs in PJM alone of $90 billion over the next 15 years — a significant increase over projected PJM energy and capacity costs over the same period,” FirstEnergy wrote. “Thus, immediate and decisive action is needed by the Commission to prevent these retirements.”

Under the company’s plan, which goes into more detail than DOE’s original proposed rulemaking, generating units would receive the difference between their full recovery costs and the revenues they receive from existing markets.

“Thus, the … Unit must participate in the market — it cannot simply sit idly by and collect revenues,” FirstEnergy said.

The company said this arrangement would negate arguments by opponents that say the plan would destroy the electricity markets as they exist.

Key to FirstEnergy’s argument: the claim that markets and rules as they exist now are insufficient.

“Nothing short of decisive and immediate Commission action consistent with the Proposed Rule will stop the continuing closure of fuel secure generation resources needed to ensure continued reliability of the power grid,” it wrote.

FERC could take any of a number of options by its Dec. 11 deadline beyond simply accepting or rejecting the DOE plan, including restarting the proceedings with its own rulemaking or convening technical conferences.

Also potentially shaping the process is that FERC could have a new chairman as soon as this week, with Jones Day energy lawyer Kevin McIntyre awaiting confirmation by the Senate, along with another new commissioner, Democratic Senate aide Richard Glick (E&E Daily, Nov. 3).

As soon as he is sworn in, McIntyre will take over as chairman from Neil Chatterjee, a former energy aide to Senate Majority Leader Mitch McConnell (R-Ky.) who has so far been charged with leading FERC’s work on the DOE rule.