N.Y. grid operator: FERC rulings a win for clean energy

Source: By David Iaconangelo, E&E News reporter • Posted: Sunday, March 8, 2020

A series of rulings last month from the Federal Energy Regulatory Commission are unlikely to affect New York’s climate goals as feared, the president of the state’s grid operator said yesterday.

But it remains unclear whether FERC would try to block a price on carbon emissions in New York — an idea pushed by the New York Independent System Operator (NYISO) and clean energy groups. It’s an idea that has yet to win support of Democratic Gov. Andrew Cuomo.

“In this day and age, politics tends to get in the way of progress in a lot of different areas,” said NYISO President Rich Dewey in an interview with E&E News. “That’s a general concern.”

Dewey said a handful of decisions FERC made last month show the agency has “a willingness to recognize regional differences.”

“What I sense out of this FERC is, they want markets to work. They want a plan and a solution so that we can coexist,” he added.

The comments came about two weeks after FERC imposed “buyer-side mitigation” measures on renewables, demand response and energy storage that compete in New York’s capacity markets (Energywire, Feb. 21).

Critics, including the New York State Energy Research and Development Authority, were dismayed by the decision, saying it would raise the cost of clean energy technologies and make it harder for the state to achieve its climate goals. Those include 70% renewable power by 2030 and an economywide decarbonization by 2050.

FERC altered the rules in the state’s power markets to make it easier for fossil fuel plants to stay in business in the face of competition from cheaper clean energy. In a series of 2-1 votes, FERC issued four orders affecting how NYISO can conduct auctions for electric generating capacity several years out (Energywire, Feb. 21).

While FERC Chairman Neil Chatterjee (R) described the agency’s actions at the time as “narrow” and intended to “broaden the market’s protections against price distortions,” Democratic Commissioner Richard Glick disagreed. Glick, who dissented, said he was “very disappointed we’ve gotten to this place” and added that FERC’s decisions would “make renewables, demand response and energy storage less likely to clear in the market.”

But Dewey disagreed. On both of the orders involving renewable energy, he said, FERC had largely sided with NYISO, handing down “a win for the state and for renewables.”

The other two orders, on demand response and storage, were less positive but still unlikely to hurt those resources much, he said.

Energy storage interests, he noted, were disappointed that they weren’t exempted from new mitigation measures. But NYISO is working on its own adjustment to buyer-side rules.

“If we’re successful with this rule change we’re working on right now, we think [FERC’s order] will have very minimal impact in the near term,” said Dewey.

Carbon pricing

One of the biggest policy initiatives for NYISO at present — a carbon price — is still just an idea.

The grid operator has commissioned studies to demonstrate its benefits and says it could be one of the most important engines of the energy transition in New York.

“A market is probably the most effective vehicle to drive that radical change,” said Dewey.

NYISO won’t pursue it unless it gets backing from the state, however.

If the governor and legislators do lend support, NYISO will need to prove to FERC that the plan would continue to ensure “just and reasonable rates” on energy markets.

Whether FERC would do so remains an open question. Its recent decisions in cases involving a separate grid operator, PJM Interconnection, have prompted criticism from clean energy advocates, who say the commission’s majority is seeking to protect fossil fuel resources from state-level renewable subsidies.

The Trump administration has also kept up a low-intensity clash with Cuomo’s government on various issues, including the state’s refusal to permit new natural gas pipelines.

As recently as Tuesday, the president revived that dispute, calling the permit denials “unfair to the rest of the country” during a speech to the National Association of Counties.

But Dewey said the decisions in the four New York cases had left him “encouraged.”

“I think FERC has given New York a path forward,” he said.