FERC signals flexibility on grid resiliency plan
Washington, 13 October (Argus) — The Federal Energy Regulatory Commission (FERC) is considering ways to modify a grid resiliency plan being pushed by US secretary Rick Perry that critics say would destroy wholesale power markets.
Perry has given the agency two months to act on his proposal, which would allow coal and nuclear plants in the northeast and midcontinent to recover their costs and make a profit so long as they held 90 days of on-site fuel. Owners of competing plants worry it would radically transform power markets and force customers to subsidize plants that are no longer economic to run.
FERC chairman Neil Chatterjee today said there were other ways the agency could meet its obligation to act on the plan, rather than simply approving or rejecting it within 60 days. FERC could issue an advanced notice of proposed rulemaking, offer more time for comments, request a technical conference, or take other actions.
Those options would give FERC the flexibility to value resiliency in ways other than holding 90 days of on-site fuel, a metric critics say would be unfairly discriminatory to other power plants including natural gas.
"We are looking to find a way to perhaps correct market deficiencies that are not properly valuing some of these assets, in a legally defensible manner, that does not blow up the market," Chatterjee told reporters in his public remarks on the proposal.
FERC member Cheryl LaFleur, a Democrat, last week indicated concerns with the proposal. She said she was skeptical of proposals that start by identifying a type of power plant and then worked backward to find market rules to support them. Chatterjee said he agreed with those remarks and that any solution FERC approves would be "fuel neutral."
But Chatterjee said he was "sympathetic" to concerns Perry raised about the reliability risk from the retirement of baseload power plants. Perry yesterday at a congressional hearing said his plan aimed to protect the grid against worst-case conditions, and Chatterjee today said FERC needed to take a long-term view on reliability.
Chatterjee also downplayed concerns from groups representing the natural gas industry, merchant power plants, and wind and solar companies that 60 days was not enough time for FERC to take action on the proposal.
"It is not a new issue," he said. "We have ample time to receive comments."