Energy groups ask FERC to move carefully on proposed resiliency rule

Eleven energy associations including the American Petroleum Institute, Interstate Natural Gas Association, and Natural Gas Supply Association petitioned the US Federal Energy Regulatory Commission on Oct. 2 to use a deliberate process as it considers a proposed rulemaking aimed at improving the domestic electricity grid’s reliability and efficiency.

Eleven energy associations including the American Petroleum Institute, Interstate Natural Gas Association, and Natural Gas Supply Association petitioned the US Federal Energy Regulatory Commission on Oct. 2 to use a deliberate process as it considers a proposed rulemaking aimed at improving the domestic electricity grid’s reliability and efficiency.

US Energy Sec. Rick Perry ordered the rulemaking on Sept. 29. “Distorted price signals in the [FERC]-approved organized markets have resulted in undervaluation of grid reliability and resiliency benefits provided by traditional baseload resources such as coal and nuclear,” Perry said in his letter to the commission.

“The rule will ensure that each eligible reliability and resiliency resource will recover its fully allocated costs and thereby continue to provide the energy security on which our nation relies,” Perry said.

In their petition to FERC, the associations:

• Opposed the Department of Energy’s request for an interim final rule.

• Requested at least a 90-day comment period to consider potential ramifications for consumers and billions of dollars in energy investments.

• Requested a technical conference before the end of a comment period so stakeholders could understand the proposal fully and provide meaningful input.

• Noted that other deadlines in DOE’s proposal are “wholly unreasonable and insufficient” and should be extended, should FERC “decide to proceed with a rulemaking of this type at all.”

NGSA Pres. Dena E. Wiggins called the proposal a drastic proposal that would distort energy markets the day that Perry announced it.

“We agree that our electric grid must rely on a diverse fuel mix that includes all fuels,” Wiggins said on Sept. 29. “However introducing market distortions and fuel preferences into the energy mix is a disservice to consumers and contrary to the nondiscriminatory principles of the Federal Power Act.

“Instead, competitive fuel-neutral energy markets produce the best outcomes for consumers, including a diverse fuel mix. In fact, our energy mix has never been as diverse as it is today,” Wiggins said.

Interstate Natural Gas Association Pres. Donald F. Santa also was displeased. “We are deeply disappointed that the secretary would propose a FERC rulemaking that, if adopted, would so clearly favor a very limited set of fuels and technologies for generating electricity,” he said.

“This is particularly surprising given that the staff report to the secretary on electricity markets and reliability acknowledged the importance [of] fuel neutrality in its recommendation that FERC study and consider a way to value reliability attributes in its wholesale electric market rules,” Santa said.

“We support efforts to ensure reliability, and we look forward to fully participating in the rulemaking process to come,” said Martin J. Durbin, API executive vice-president and chief strategy officer.

“However, as we review the proposal, we are concerned [DOE] has mischaracterized the lessons learned from past weather-related events and appears to suggest that additional regulation is the answer,” Durbin said. “Markets have already proven the ability to greatly benefit consumers and give our electric system the flexibility needed to meet constantly, and often rapidly, changing electricity demands.”

Contact Nick Snow at nicks@pennwell.com.

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