On September 29, the Department of Energy released a Notice of Proposed Rulemaking (NOPR) that would bail out unprofitable coal and nuclear plants. The notice argues generators with fuel on-hand are necessary for reliability and resilience, though these claims are demonstrably false. Nevertheless, FERC has acted on DOE’s proposal and seeks comments by October 23 to determine whether DOE’s proposal becomes a FERC regulation. FERC’s set of questions for stakeholders can be found here.
We created America’s Power Plan to deliver helpful analysis to policymakers to support the energy transition to a clean, affordable, resilient grid. Though two of the three sitting FERC commissioners (Powelson & LeFleur) have publicly indicated they do not support the NOPR approach, this is no guarantee their decision will defend well-functioning wholesale markets and incorporate the best evidence that a renewable energy future is resilient and affordable. It will be important to build a robust record that supports analysis from the DOE’s own report on reliability and resilience published in July—markets are more-than-adequately supporting reliability, and customers should benefit from lower costs as clean energy comes in to undercut other resources. A forthcoming report in October from APP experts Robbie Orvis and Sonia Aggarwal will focus on solutions already underway in wholesale markets to value flexibility, a key ingredient of resilience.
To help our readers who want to get involved in this debate gather the best arguments out there, here are some resources from the experts of America’s Power Plan and others.
Resources from APP Experts:
- DOE Rulemaking Threatens To Destroy Wholesale Markets With No Tangible Benefit, Robbie Orvis and Mike O’Boyle, Utility Dive.
The Department of Energy’s Notice of Proposed Rulemaking (NOPR) to FERC, directing the Commission to issue new tariff rules that reward certain (coal and nuclear) resources for so called “resilience” benefits, fails to demonstrate how it will improve resilience while threatening to upend the very markets it purports to protect.
The nearly unprecedented NOPR requires FERC to establish a tariff and “recovery of costs and a return on equity” for plants that have “a 90-day fuel supply on site,” which they argue would enable the plants “to operate during an emergency, extreme weather conditions, or a natural or man-made disaster.” According to the NOPR, “compensable costs shall include, but not be limited to, operating and fuel expenses, costs of capital and debt, and a fair return on equity and investment.”
- Rick Perry’s New Coal Subsidy Could Wreck America’s Power Markets, Hal Harvey, The Hill.
When old, established industries are threatened by new, better technologies, they often go running to Washington for special protections. It is an old practice, generally taxing the common good for private interests. Unfortunately, the U.S. Department of Energy has set a new record for gall in this practice in a fairly stunning move that would impose a new tax on electricity consumers and roil America’s power markets for years to come.
Here’s the story: Renewable energy — especially wind and solar — has plummeted in price. Today a new wind farm, for example, is often cheaper than just the operating costs of an old coal power plant. Cheap natural gas creates additional price threats to existing coal or nuclear. And these favorable economics for renewables and gas don’t even count the public benefits they create through clean air, reduced greenhouse gas emissions and avoided fuel price spikes. . . . Click to read more
What analysts are saying
ICF forecasts DOE’s proposal could cost ratepayers between $800 million and $3.8 billion annually through 2030, and reduce development of new natural gas-fired capacity by 20-40 gigawatts:
Rhodium Group says only .0007% of nationwide power disruptions over the past five years were due to fuel supply problems, and the vast majority were the result of severe weather damaging transmission and distribution:
What stakeholders are saying
- Miles Farmer, Sustainable FERC & NRDC. DOE Proposes Outrageous, Massive Coal and Nuclear Bailout
- PJM Interconnection, PJM Inside Lines. PJM Responds to DoE Proposal
- Andrew Coffman Smith, SNL Energy. FERC’s Powelson Pledges “Not To Destroy” Energy Markets Despite DOE Directive
- AEE, ACORE, API, APPA, AWEA, ECRC, EPSA, INGAA, NRECA, NGSA, SEIA. Joint motion of the energy industry associations in response to the secretary of energy’s requests for an interim final rule
From the Media
- Rod Kukro, E&E News. Perry Calls On FERC To Dismantle U.S. Power Markets
- Chris Mooney, Washington Post. Rick Perry Just Proposed Sweeping New Steps To Help Struggling Coal And Nuclear Plants
- Gavin Bade, Utility Dive. How DOE’s Baseload Power Rules “Would Blow The Market Up.”
- Tim Loh, Bloomberg. Perry’s Coal Proposal Unlikely To Reverse Historic Decline
- David Roberts, Vox. Rick Perry’s Plan To Subsidize Coal And Nuclear Plants Is Bonkers
Analysis of the DOE Report
- Mike O’Boyle, Energy Innovation & America’s Power Plan. Resilience or flexibility? DOE’s grid report lays bare the struggle between past and future.
- John Moore & Miles Farmer, Sustainable FERC & NRDC. DOE’s Grid Study: Clinging to the Past.