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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The Federal Energy Regulatory Commission (FERC) (Washington, D.C.) on Monday terminated its Notice of Proposed Rulemaking (NOPR) into whether coal-fired and nuclear power plants should be given subsidies that recognize their grid reliability and resilience characteristics that stemmed from baseload power plants having 90 days of fuel stockpiled on their sites. Instead, the commission opened a new regulatory proceeding that will "holistically examine the resilience of the bulk power system."
"The Commission places a priority on resilience," FERC said in a statement, adding it "recognizes that it must remain vigilant with respect to resilience challenges, because affordable and reliable electricity is vital to the country's economic and national security."
FERC's decision was a blow to the Trump administration's goal of providing financial support to traditional baseload power plants. The administration sought to compensate owners of those plants for characteristics that support resilience in bulk power markets. For more on the background to Monday's decision, see October 12, 2017, article - U.S. Department of Energy Study Calls for Increased Baseload from Coal, Nuclear Plants.
The proceeding drew an avalanche of comments at the FERC, which has only recently resumed its full strength of five commissioners. The Department of Energy (DoE) (Washington, D.C.) had wanted a decision from FERC in by early December, but it gave FERC an additional month to allow the new commissioners to study the matter. For several months in 2017, the commission was unable to issue decisions because it lacked a quorum. For more on that, see March 6, 2017, article - New Hurdle for Interstate Energy Projects: A Quorum-less FERC.
Rather than interfere outright in wholesale markets, FERC directed the operators of the regional wholesale power markets to provide information to FERC within 60 days to determine "whether FERC and the markets need to take additional action on resilience of the bulk power system. The goals of this proceeding are to develop a common understanding among the Commission, industry and others of what resilience of the bulk power system means and requires; to understand how each regional transmission organization and independent system operator assesses resilience in its geographic footprint; and to use this information to evaluate whether additional Commission action regarding resilience is appropriate. FERC expects to review the additional material promptly."
Immediate efforts to reach the Nuclear Energy Institute (NEI) (Washington, D.C.) and the American Coalition for Clean Coal Electricity (ACCCE) (Falls Church, Virginia) were unsuccessful. Both groups had enthusiastically supported the NOPR effort, which was spearheaded by Energy Secretary Rick Perry.
The FERC NOPR had been opposed by a coalition of environmentalists, merchant generators, regional transmission organizations, and the oil, natural gas and renewable energy industries. They argued that power outages due to fuel disruptions are extremely rare and Perry's rule would distort prices in competitive power markets, which were designed to lower costs.
Late last week, as an Arctic freeze gripped the Midwest and East Coast, some observers wondered whether FERC's decision, due January10, might be swayed by what amounted to Polar Vortex II, a re-run of a severe cold snap that hit the Midwest and Northeast in early 2014. Though prices for natural gas and electricity spiked temporarily during last week's deep freeze, there were no widespread weather-related outages at generators. By contrast, the 2014 cold snap created gas-delivery problems for power plants, forcing operators to take coal-fired units out of mothballs to keep the lights on.
FERC "expressed its appreciation to Secretary of Energy Rick Perry for his having reinforced grid resilience as an important issue that warrants the further attention of FERC."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
"The Commission places a priority on resilience," FERC said in a statement, adding it "recognizes that it must remain vigilant with respect to resilience challenges, because affordable and reliable electricity is vital to the country's economic and national security."
FERC's decision was a blow to the Trump administration's goal of providing financial support to traditional baseload power plants. The administration sought to compensate owners of those plants for characteristics that support resilience in bulk power markets. For more on the background to Monday's decision, see October 12, 2017, article - U.S. Department of Energy Study Calls for Increased Baseload from Coal, Nuclear Plants.
The proceeding drew an avalanche of comments at the FERC, which has only recently resumed its full strength of five commissioners. The Department of Energy (DoE) (Washington, D.C.) had wanted a decision from FERC in by early December, but it gave FERC an additional month to allow the new commissioners to study the matter. For several months in 2017, the commission was unable to issue decisions because it lacked a quorum. For more on that, see March 6, 2017, article - New Hurdle for Interstate Energy Projects: A Quorum-less FERC.
Rather than interfere outright in wholesale markets, FERC directed the operators of the regional wholesale power markets to provide information to FERC within 60 days to determine "whether FERC and the markets need to take additional action on resilience of the bulk power system. The goals of this proceeding are to develop a common understanding among the Commission, industry and others of what resilience of the bulk power system means and requires; to understand how each regional transmission organization and independent system operator assesses resilience in its geographic footprint; and to use this information to evaluate whether additional Commission action regarding resilience is appropriate. FERC expects to review the additional material promptly."
Immediate efforts to reach the Nuclear Energy Institute (NEI) (Washington, D.C.) and the American Coalition for Clean Coal Electricity (ACCCE) (Falls Church, Virginia) were unsuccessful. Both groups had enthusiastically supported the NOPR effort, which was spearheaded by Energy Secretary Rick Perry.
The FERC NOPR had been opposed by a coalition of environmentalists, merchant generators, regional transmission organizations, and the oil, natural gas and renewable energy industries. They argued that power outages due to fuel disruptions are extremely rare and Perry's rule would distort prices in competitive power markets, which were designed to lower costs.
Late last week, as an Arctic freeze gripped the Midwest and East Coast, some observers wondered whether FERC's decision, due January10, might be swayed by what amounted to Polar Vortex II, a re-run of a severe cold snap that hit the Midwest and Northeast in early 2014. Though prices for natural gas and electricity spiked temporarily during last week's deep freeze, there were no widespread weather-related outages at generators. By contrast, the 2014 cold snap created gas-delivery problems for power plants, forcing operators to take coal-fired units out of mothballs to keep the lights on.
FERC "expressed its appreciation to Secretary of Energy Rick Perry for his having reinforced grid resilience as an important issue that warrants the further attention of FERC."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
