The Trump Administration campaign to keep online uncompetitive coal and nuclear power plants is not exactly going smoothly.
The recent Department of Energy (DOE) study was outed as a transparent attempt to provide a rationale for keeping these favored sources of generation before it was even launched. In fact, a leaked draft exposed that without significant tampering such a study could not support the conclusion that this generation was needed.
But lack of credible rationale is not the sort of thing that stops Energy Secretary Perry. Perry’s ham-handed order to FERC to create a process to compensate “resilient” generation, which is defined in such a way as to only apply to coal and nuclear power plants, has been embraced by FERC’s new pro-coal chair.
“Fundamentally distort markets”
This does not mean that this effort is unopposed. In addition to being resisted by most other industries in the power sector – including the unlikely alliance of renewable energy, gas and electricity trade groups – FERC’s proposed rulemaking on grid resiliency has drawn opposition from a bipartisan group of former commissioners.
The group of eight commissioners, including five former chairs, slammed the proposal as a “significant step backward” in the development of competitive wholesale markets, noting that while this has required many tweaks, “one step the commission has never taken is to create or authorize on its own the kind of subsidy proposed here.”
The commissioners further note that the rationale for the proposed subsides are utterly bogus, writing “[f]uel supply emergencies have been an insignificant cause of customers outages. To the extent these could become an issue, there are market-based solutions that can be employed.”
The commissioners are clear that this would not be without consequence, stating that subsidizing resources so that they do not retire would “fundamentally distort markets”, and that “this loss of faith in markets would thereby undermine reliability”.
“The injection of uncertainty over the future of efficient, competitive electric markets and highly capital-intensive and vitally important electric industry impairs critical long-term investment and jeopardizes the delivery of cost-effective energy services to customers,” the commissioners wrote.
Resistance by other commissioners
The strong condemnation of this move by a quarter-century worth of FERC commissioners and chairs is not the only resistance that the Notice of Proposed Rulemaking (NOPR) is encountering.
Three current FERC members, including two Democrats, have also concerns over the proposal. Commissioner Cheryl LaFleur has joined criticisms made by energy lawyers about the vagueness of the NOPR, telling Utility Dive that it would need to be “considerably more detailed” to form a final rule.
But it is not only Democrats that are raising alarm. Montana Public Service Commissioner Travis Kavulla has also come out strongly against the rule and its potential impact of competitive markets.
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