FERC member calls wind report on PTC, nuclear closures ‘compelling’

Source: Hannah Northey, E&E reporter • Posted: Friday, April 18, 2014

A member of the Federal Energy Regulatory Commission today said the American Wind Energy Association presented “compelling” information that wind production tax credits are not a major factor in making nuclear power uneconomical.
Speaking at FERC’s monthly meeting in Washington, D.C., Commissioner John Norris said he had asked for information about why baseload nuclear power plants are being forced out of the market and whether production tax credits for the wind industry were a factor.Since receiving AWEA’s report, Norris said, he’s asked Exelon Corp., the country’s largest nuclear plant operator, for more feedback.”I just want to get to the bottom of the economics of this,” said Norris, a Democrat from Iowa, where wind energy is prominent. “If the PTC isn’t a factor … then let’s get it out of our rhetoric.”

The fate of the wind PTC has been a thorny issue in the energy industry in recent months, with utility Exelon Corp. arguing that the PTC allows wind power producers to sell into competitive markets at negative prices, undercutting its fleet of nuclear reactors.

FERC Commissioner Philip Moeller today reiterated his concerns about the effect of the wind PTC on energy markets and said the “debate is ongoing.” Moeller also outlined the agency’s steps to integrate renewables.

AWEA released a report in March, which asserted Exelon had overstated the extent to which negative pricing occurs and says those situations can be blamed on factors other than the PTC, such as transmission bottlenecks. The association also argued that wind’s ability to reduce electricity prices is a boon for consumers (E&E Daily, March 28).

Joseph Dominguez, Exelon’s senior vice president for governmental and regulatory affairs and public policy, in the past has questioned the premise of the AWEA study, saying it relied on day-ahead prices in the markets it studied rather than using real-time price data where negative pricing was more visible.

Dominguez said Exelon supports efforts to incentivize wind energy, as long as such incentives do not undercut the value of nuclear, which provides baseload electricity without carbon dioxide emissions.

Exelon, which has 17 reactors in the Midwest and Mid-Atlantic, has blamed subsidized wind — along with cheap gas and waning demand — for forcing it to scrap two nuclear expansion projects in Illinois and Pennsylvania (Greenwire, June 12, 2013).

The utility has also blamed market structures. Exelon Generation President and CEO Kenneth Cornew said at a Platts conference in Nevada earlier this month that competitive market rules and state and federal energy policies have failed to keep pace with an influx of cheap gas, rapid expansion of renewables, “smart grid” development, behind-the-meter technologies and low demand growth (E&E Daily, April 11).

Also today, Norris, Moeller, FERC Commissioner Tony Clark and FERC acting Chairwoman Cheryl LaFleur unanimously approved four filings from grid operators complying with Order 764, aimed at easing the integration of intermittent power sources like solar and wind into the grid. The largest changes will occur in California, where grid operators are implementing a number of large reforms, including more granular forecasts.