Resistance to Perry grid plan grows at FERC
Washington, 16 October (Argus) — US energy secretary Rick Perry is facing pushback on his plan to subsidize "fuel secure" coal and nuclear power plants from another member of the Federal Energy Regulatory Commission (FERC).
FERC member Robert Powelson says that plan will be a starting point for discussions on grid resiliency but adds that the agency does not "pick winners and losers" among fuel resources. He also said he did not want to disrupt power markets, which industry critics say is something that could happen under Perry's proposal.
Perry has set a two-month deadline for FERC to act on his grid resiliency proposal, which would allow power plants with a 90-day on-site fuel supply to fully recover their costs and earn a profit. Natural gas groups and renewable energy companies say that proposal is discriminatory to them and would create chaos in power markets.
Powelson today challenged one of the main premises of plan, which is that power plants without on-site fuel performed poorly during the extremely cold "polar vortex" event in early 2014. More than 40,000MW of capacity in the eastern grid managed by the PJM Interconnection went off line during that event, of which 9,300MW was caused by natural gas supply problems. Coal generation accounted for 13,700MW of the outages, while another 9,700MW came from natural gas power plant outages.
"There is a dirty little secret the gas guys did not perform," Powelson said today at a conference hosted by the American Association of Blacks in Energy. "I am here to tell you unequivocally that was not the case."
Powelson, a Republican, joins others at the agency in raising concerns with the proposal. FERC chairman Neil Chatterjee, also a Republican, last week said he did not want to do anything that would disrupt power market structures. And FERC's other member, Democrat Cheryl LaFleur, has said she is skeptical of any proposals that try to find ways to "save" specific resources.
Coal and nuclear industry groups support the grid proposal. Nuclear Energy Institute legislative affairs director Robert Powers said at the conference that something needs to change to avoid the retirement of nuclear plants, which under existing market rules sometimes have to pay the grid to take their power because of negative prices.
But oil and natural gas industry group American Petroleum Institute president Jack Gerard said there needs to be a "longer conversation" at FERC about grid resiliency and electricity prices. He said regulators should not "not jump into the middle" of that conversation with a rapid response that disrupts markets.