FERC urged to slow grid resiliency overhaul: Update

Source: By Argus Media • Posted: Friday, October 6, 2017

Washington, 3 October (Argus) — Oil and gas producers, independent power plants and renewable energy groups fighting against a sweeping “grid resiliency” proposal appear to have at least one sympathetic ear at the US Federal Energy Regulatory Commission (FERC).

FERC commissioner Cheryl LaFleur today did not directly criticize the resiliency proposal from US energy secretary Rick Perry. But she indicated skepticism about proposals to overhaul electric rules that start with a predetermined goal of helping certain power plants. Perry’s proposal instructs FERC to develop special payments to “fuel secure” generators with at least 90 days of on-site fuel supplies, an attribute that would apply almost exclusively to coal and nuclear plants.

LaFleur, the only Democrat serving at FERC, said the recent successful changes to electric market rules began with an effort to identify “an attribute that is needed to keep the lights on,” followed by an attempt to find a fuel-neutral way to price that attribute in markets.

“I am more skeptical of ideas that start with a resource and then try to save it and then come up with the attribute,” LaFleur told natural gas executives today at Energy Dialogues’ North American Gas Forum in Washington, DC.

Perry last week gave the agency a tight deadline to consider his grid resiliency proposal. FERC last night said it would accept an initial round of public comments through 24 October, and then allow replies to those comments by 7 November. FERC needs to approve or reject his proposal within 60 days, and electric grid operators would only have about two weeks to implement new rules once they take effect.

But an unusual alliance of oil and gas groups, power plant owners and renewable energy producers, in a regulatory filing yesterday to FERC, said that the time frame is not long enough to consider “one of the most significant proposed rules in decades related to the energy industry” that could affect power prices for hundreds of million of consumers.

The American Petroleum Institute, the Natural Gas Supply Association, the Electric Power Supply Association, the American Wind Energy Association and Solar Energy Industries Association, in their filing, say there is no emergency situation to justify such a short comment period. FERC should “reject the proposed unreasonable timeframes” and provide at least 90 days of comment, if it decides to proceed with the rulemaking at all, they said.

Coal and nuclear groups have lauded the proposal, which they say is needed to maintain the reliability of the grid. The proposal would allow “fuel-secure” generators to fully recover their operating costs and earn a fair return on capital. But critics say the plan would force customers to bail out struggling coal and nuclear plants, while creating a market disadvantage for gas-fired power plants and renewable energy.

“We are very troubled,” Natural Gas Supply Association president Dena Wiggins said yesterday at Energy Dialogues’ North American Gas Forum. “Introducing market distortions and fuel distortions into that energy mix we think is a disservice to the American consumer.”

The grid resiliency proposal needs at least two votes at FERC to be approved, assuming the US Senate does not quickly confirm two pending nominees. FERC’s acting chairman Neil Chatterjee and member Robert Powelson, who are both Republicans, have not publicly commented on the proposal.