FERC’s Friday night dump

Source: By Kelsey Tamborrino, Politico • Posted: Friday, July 6, 2018

Regulators at FERC have known that one day they would have to decide how they would move to protect the power markets they oversee from the state-enacted energy programs, particularly those that support nuclear units, that are tilting the playing field. A divided FERC waded in Friday nightin a way that raised concerns among climate advocates and consumer groups about the future of the markets and the viability of state energy initiatives.

So … what happened? PJM Interconnection, which runs the market that spans 13 states, came to FERC with two proposals this spring for “mitigating” state energy programs in its capacity market that ensures enough power plants are available to provide electricity. FERC didn’t like either PJM plan. But the commission’s three Republican members ordered PJM to rewrite its current market rules, declaring they were “unjust and unreasonable and unduly discriminatory.” The order — which was published at 8:45 p.m. Friday — stated the current rules didn’t protect competition in the capacity market against “unreasonable price distortions and cost shifts” from the state policies that are keeping older, uneconomic plants resources in operation or subsidizing new power technologies that aren’t yet competitive. Axing the current rules may indicate that FERC’s tolerance for state programs may be over.

In a late-night tweetstorm, Democratic FERC Commissioner Rich Glick took issue with the move, writing that the agency shouldn’t use its authorities to restrain state efforts to address global warming. “Doing so puts the Commission on the wrong side of history in the fight against climate change,” he said.

Fellow Democrat, Cheryl LaFleur, also weighed in with a sharp dissent. The majority was considering “the most sweeping changes to the PJM capacity construct since the market’s inception more than a decade ago.” The commission, she added, is “proceeding to overhaul the PJM capacity market based on a thinly sketched concept, a troubling act of regulatory hubris that could ultimately hasten, rather than halt, the re-regulation of the PJM market.”

Doing DOE’s work: Public Citizen’s Tyson Slocum has been raising this issue to ME since before the Energy Department’s grid study was released last year, warning that DOE’s efforts to rescue coal and nuclear plants would surely give cover to PJM’s plans. “FERC is now clearing a wide path … for PJM to implement a ‘market-based’ bailout for uneconomic power plants that will have profound impacts on working families’ utility bills and on states’ ability to craft emissions reduction strategies,” he said by email. “Everyone remains focuses on the DOE’s clumsy efforts to pick winners and losers, while FERC quietly just gave a green light for PJM to do the same.”

What now? FERC is taking comments through Aug. 28 and will “make every effort” to issue new rules by Jan. 9.