Two Takes on Comments to FERC-DOE Resilience Proposal

The Federal Energy Regulatory Commission got blitzed this week with comments on the Department of Energy’s proposed rule to give nuclear and coal plants a competitive advantage in competitive wholesale markets run by regional transmission organizations (RTOs). Comments came in such volume Monday that it crashed FERC’s “eFiling” system, giving those making comments another day to file and reporters another day to read and try to grasp comments.

I have not read all the comments (nor will I). Predictably, coal and nuclear interests are enthusiastic. Most other electric interests are giving the proposal two thumbs’ down. But a couple strike me as quite perceptive about the con game DOE and Secretary Rick Perry are trying to run in the name of “resilience.”

First, the Natural Resources Defense Council, long a major player in electric market structures, asks a fundamental question: “What’s Resilience? DOE Should Say Before Spending Your Money.” NRDC attorney Jennifer Chen writes, “This proposal hinges on the idea that onsite fuel will somehow provide the electric grid with “resilience.” But the DOE never explained what “resilience” means, let alone how making coal piles bigger would help.”

NRDC's Jennifer Chen

NRDC’s Jennifer Chen

 

 

 

NRDC suggests that a realistic proposal would include “basic steps:”

* What is resilience and how does it differ from “reliability,” which consumers are already paying for and a DOE study has said is not a major problem for the U.S. grid.

* What metrics can compare “resilience” of the grid from various generating, transmission, and distribution technologies.

* Prioritize the issues and consider alternative.

* Come up with ways to address those issues.

* “Allow all resources to compete in providing these services to minimize the cost to consumers.”

The DOE proposal to FERC, notes NRDC, “fails to even attempt any of them.”

Then there are the comments from the American Public Power Association, representing government-owned electric utilities. (Full disclosure: I worked for APPA in the early 1990s.)

APPA CEO Sue Kelly commented, “The DOE’s directive to FERC proposes extreme measures that will impose significant costs on customers without any justification. The RTO-operated markets are not designed to achieve fuel diversity. The markets do need significant reform but the DOE proposal would take them in the wrong direction.”

APPA makes several salient points:

* DOE’s proposal doesn’t establish that shutting down coal and nuclear plants that can’t survive in competitive markets “presents an immediate reliability threat that must be addressed through a hastily defined rule.”

* There is no evidence that the DOE proposal – subsidies for generating technologies with an on-site 90-day fuel inventory – would address the concerns that Perry raises.

* The proposal is illegal by requiring the competitive markets to alter their tariffs “without even considering the potential rate impact on consumers, contradicting the Federal Power Act.”

* DOE presumes a need for coal and nuclear generation, then says they should be paid a cost-of-service rate “without any meaningful analysis of whether those resources are actually required for system reliability or resilience.”

While it is difficult to suss out current or future FERC politics, my guess is that the FERC notice will produce a killer-trees quantity of comments, an endless wheel spinning of analysis, and ultimately, from Shakespeare’s MacBeth (scene 5), “A tale told by an idiot, full of sound and fury, signifying nothing.”