Secretary Perry Seeks Market Rules That ‘Properly Value’ Coal, Nuclear Generation

The U.S. Department of Energy today said that energy markets are not fairly valuing bulk power generation resources, such as coal and nuclear plants, and that federal regulators need to do something about it.

In a Notice of Proposed Rulemaking (NOPR) released today, Secretary Rick Perry proposed that the Federal Energy Regulatory Commission (FERC) issue a final rule requiring its organized markets to develop and implement rules that accurately price generation resources necessary to maintain the reliability and resiliency of the U.S. bulk power system. FERC has 90 days to act on the NOPR following its publication in the Federal Register.

The NOPR follows the release in August of the DOE staff report on the status of the U.S. electricity grid — a study that was meant to identify why coal plants are retiring and whether certain energy policies were causing grid instability. About 12,700 MW of coal generation is set to retire by 2020.

In the NOPR, DOE said that the report confirms the “economic hardship faced by some of the most resilient types of generation.”

As proposed, the final market rules would allow for the recovery of costs for what DOE calls “fuel-secure” resources that provide “reliable capacity, resilient generation, frequency and voltage support and on-site fuel inventory.” Eligible units would be required to have a 90-day fuel supply on site in the event of supply disruption.

In a statement today, Todd Foley, Senior Vice President, Policy & Government Affairs, American Council on Renewable Energy, said “we’re concerned this proposed rulemaking uses grid resilience as an excuse to prop up plants that have not been shown to be needed, preventing consumers from buying the power they want to buy.”

Foley added that on-site fuel power sources have not helped with severe weather events such as the Polar Vortex where coal piles froze, Hurricane Harvey where coal piles flooded, and the Fukushima event where the nuclear plant ceased to operate.

He suggested that FERC articulate what it wants to achieve in terms of reliability and resiliency and let the marketplace address a solution.

“Renewable energy technologies provide many resiliency and reliability attributes to the grid, including flexibility, dispatchability, and other essential reliability services,” Foley said. “These attributes must be recognized if we are going have a serious and equitable discussion and ACORE intends to make sure these facts are included in our forthcoming public comments to the Federal Energy Regulatory Commission.”

Amy Farrell, senior vice president, government and public affairs for the American Wind Energy Association (AWEA) said in a statement that AWEA is worried that the proposal would “upend competitive markets that save consumers billions of dollars a year.”

She added that “the best way to guarantee a resilient and reliable electric grid is through market-based compensation for performance, not guaranteed payments for some, based on a government-prescribed definition. We look forward to participating in the process as FERC begins to consider the proposed rule.”

Lead image credit: CC0 Creative Commons | Pixabay

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Jennifer Delony, analyst for TransmissionHub, started her career as a B2B news editor in the local and long-distance telecommunications industries in the '90s. Jennifer began covering renewable energy issues at the local level in 2005 and covered U.S. and Canadian utility-scale wind energy as editor of North American Windpower magazine from 2006-2009. She also provides analysis for the oil and natural gas sectors as editor of Oilman Magazine.

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