Members of the US Federal Energy Regulatory Commission and of the US Senate Energy and Natural Resources Committee criticized ongoing Trump administration efforts to bail out coal-fired power plants that are increasingly unable to compete economically with facilities that use natural gas.
Protecting and promoting the bulk power system’s resilience will remain a top FERC priority, Chairman Kevin J. McIntyre said at a June 12 hearing before the committee where all five FERC commissioners testified. “However, we recognize that we must remain vigilant with respect to resilience challenges, because affordable and reliable electricity is vital to the nation’s economic and national security,” McIntyre said.
FERC terminated a proceeding in early January that considered US Energy Sec. Rick Perry’s Sept. 29 proposal on electric power grid pricing and resilience (OGJ Online, Jan. 9, 2018). It directed regional operators to provide information on whether they and FERC need to take additional steps to make power grids more resilient instead.
All seven regional transmission organizations (RTO) and independent system operators (ISO) have provided comments, and FERC also has received more than 140 submissions from public utilities, interstate gas pipelines, nuclear entities, coal producers, environmental groups, state public service commissions, public power entities, and consumer groups, McIntire said.
“FERC is reviewing the submissions and deciding whether additional action is warranted to address grid resilience,” he said.
‘We have a controversy now’
The committee’s leaders raised questions during the hearing about administration statements that the national power system increasingly is vulnerable to disruptions and that it poses national security concerns.
“We’ve been talking about plant retirements since 2010. We also have several other entities involved at the state and local level,” Chair Lisa Murkowski (R-Alas.) said. “We have a controversy now, and each of you has referred to it in several ways. It’s one where there’s so much at stake in such a heavily regulated industry as energy. The various interests are locked in. This is a real conflict.”
Ranking Minority Member Maria E. Cantwell (D-Wash.) said FERC began 2018 right by unanimously rejecting Perry’s October proposal. “I really think that not only is the underlying policy wrong in this proposal, but that it’s also a direct threat to your independence,” she said.
“Affordable electricity has driven the Pacific Northwest’s economy for years. The notion that someone would supplant delivering that affordable electricity from the most affordable units with an order to buy power that’s more expensive is a real head-scratcher in so many different ways,” Cantwell said.
Other FERC commissioners referred to the issue in their written testimony. “The current debate regarding grid resilience focuses on whether the continued retirement of certain uneconomic coal and nuclear generating facilities threaten grid resilience,” Cheryl A. LaFleur said.
“Indeed, the resource turnover we are experiencing is an expected consequence of markets, and the lower prices that result from well-functioning markets are a benefit to customers, not a problem to be solved, unless reliability is compromised,” LaFleur said.
Continued area of interest
“Competitive markets generally encourage utilities to make reasonable fuel choices. However, even with competitive markets, reliability requires careful planning and analysis to ensure that risks are anticipated and addressed when necessary,” said Neil Chatterjee. “I expect that issues of fuel security will continue to be an area of interest for the commission, both in our discussion of reliability and in our ongoing resilience proceeding.”
“Until now, intervention in wholesale electric markets has largely been from the states. However, unprecedented steps by the federal government—through the president’s recent directive to DOE to subsidize certain resources—threaten to collapse the wholesale competitive markets that have long been a cornerstone of FERC policy,” said Robert F. Powelson.
“This intervention could potentially ‘blow up’ the markets and result in significant rate increases without any corresponding reliability, resilience, or cybersecurity benefits,” he warned.
“Many observers suggest that we need to avoid becoming reliant on any one source of electric generation and, instead, encourage diversity of resources. Diversity is a worthwhile goal and one that we are increasingly realizing,” said Richard Glick. “For example, PJM Interconnection LLC states that its resource mix is more diverse than ever with wind, solar, hydro, coal, oil, natural gas, nuclear, energy efficiency, and demand response resources clearing in the most recent capacity auction.”
But other committee Democrats said the administration began circulating a memorandum 2 weeks ago outlining plans to subsidize coal-fired and nuclear power plants. “[It] is proposing a new tax on American households with its absurd, unnecessary scheme to blow up energy markets,” said Ronald L. Wyden (Ore.). “The administration is reaching into Americans’ pocketbooks only to hand that hard-earned money to mismanaged utilities and uncompetitive coal companies, many of which are Trump donors.”
Contact Nick Snow at [email protected].
