Department of Energy officials attended the National Association of Regulatory Utility Commissioners’ Annual Meeting in Baltimore this week where they defended the agency's proposal to prevent the closure of financially troubled coal and nuclear power plants.
Sean Cunningham, head of the DOE's Office of Energy Policy and Systems Analysis, said in a keynote address that he is "confident" the Federal Energy Regulatory Commission will "dutifully consider and adopt a rule that will address price formation in the electric markets," Utility Dive reports.
So far, members of the FERC have been hesitant to back the DOE's notice of proposed rulemaking, or NOPR, that would give "full recovery" of costs to power plants with 90 days of fuel supply on hand -- an attribute that applies specifically to nuclear and coal plants. Commissioners Cheryl LaFleur and Robert Powelson have said the proposal does not accurately characterize the role natural gas plays in ensuring grid reliability. Interim FERC Chairman Neil Chatterjee has said he's "sympathetic" to the rule, but is weighing several possible actions on the NOPR besides outright approval, which include convening a technical conference and launching a new rulemaking.
But with the Dec. 11 deadline to take action on the DOE's cost recovery plan fast approaching, Chatterjee seems to be narrowing in on his next move. He said last week he's now considering a short-term plan to keep as many coal and nuclear plants open as possible, while FERC conducts additional research.
“What I don’t want to have is plants shut down while we’re doing this longer-term analysis, so we need an interim step to keep them afloat,” Chatterjee told the S&P Global Platts Energy Podium event in Washington, D.C.
The "interim step" Chatterjee mentioned echoes a proposal put forward by FirstEnergy. The coal-heavy utility urged the commission to act quickly to secure extra compensation for its financially troubled power plants. Murray Energy, which sells the majority of its coal to the power company, has also pressured the Trump administration to take action.
"This issue is too important, too pressing, and too critical to the nation’s security and grid reliability to leave to the never-ending vicissitudes of" a prolonged proceeding, FirstEnergy said in comments submitted to FERC. Chatterjee disclosed that he met recently with FirstEnergy CEO Chuck Jones.
"It's important to cast that interim lifeline," Chatterjee said in an interview on Bloomberg TV. "The worst-case scenario is we do the long-term analysis, we figure out we actually did need these plants, but they're gone, they're offline and we can't get them back."
The details of Chatterjee's plan remain unclear, but he said his solution would not distort markets or alter dispatch practices for transmission grid operators.
Whatever comes next, Chatterjee said the process will continue when Kevin McIntyre, President Trump’s first pick to serve as FERC chairman, is officially sworn in later this month. Democratic commissioner, Richard Glick, will also be sworn in in the coming days.
“Kevin is somebody with a lot of expertise. He’s a smart, thoughtful guy. […] And I hope that he will ultimately be persuaded to follow the course that I’ve laid out,” Chatterjee told Bloomberg.
In his comments at the NARUC meeting, Cunningham reiterated the DOE's position that swift action to shore up coal and nuclear plants is crucial to the functioning of America’s electric grid, painting a bleak picture of the U.S. without coal and nuclear generation.
“Unfortunately, due in part to years of pressure brought to bear by opponents of coal and nuclear power, many of those plants were and are scheduled to close, which makes any number of disasters -- or just a hot day in October or a cold one in April -- a significant potential threat to our grid today," he said, in reports from RTO Insider. "What if they had closed? How would that closure have affected the functioning of our hospitals? How would it have affected our police and firefighting capabilities? How would it have impacted the operations of our military?”
“Washington has been stacking the deck against coal and nuclear power for years despite their benefits to the grid,” Cunningham continued. “President Trump’s clear direction is to unleash every energy resource to make America energy-dominant," and he has nominated people for government "who share that vision and are willing to address the regulatory burdens and government overreach that have limited our growth potential." Energy Secretary Rick Perry is one of those people, he said.