FERC’s Chatterjee Has Interim Plan to Prop Up Coal, Nuclear Plants

Federal Energy Regulatory Commission (FERC) Acting Chairman Neil Chatterjee, who has said he is “sympathetic” to a rule that would help prop up struggling U.S. coal and nuclear power plants, apparently is ready to move forward with an interim plan to keep financially troubled plants operating while his agency continues to consider a market-changing cost proposal from the Department of Energy (DOE).

Utility Dive on November 15 reported that Chatterjee is “considering regulatory action,” saying FERC could issue a “show cause” order directing regional transmission organizations (RTOs) and independent system operators (ISOs) to update market tariffs to keep baseload plants, or those with “necessary resilience attributes,” operating or show why those plants should not continue to remain online. That would provide time for FERC to institute rules regarding electricity grid resilience and market compensation.

Chatterjee, who said he has not detailed his plan with other FERC staff, told Utility Dive his proposal would be “messy” and “uncomfortable.” He said his interim step could dovetail with a broader rule on grid resilience to “accelerate” the process. Chatterjee last week broached the notion of an interim step in comments at the S&P Global Platts Energy Podium event in Washington, D.C., where he said “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 also had discussed a short-term solution in a recent interview with Bloomberg, saying “It’s important to cast that interim lifeline. 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.”

DOE officials this week have defended their agency’s notice of proposed rulemaking (NOPR) that would allow power plants to fully recover their costs of power generation, provided they keep a 90-day supply of fuel on hand–a rule designed specifically to aid coal and nuclear plants. The “Grid Resiliency Pricing Rule” was proposed in late September, directing FERC to mandate power market rules to accurately price what it calls “fuel-secure” generation.

Sean Cunningham, who leads the DOE’s Office of Energy Policy and Systems Analysis, in his keynote address this week at the National Association of Regulatory Utility Commissioners meeting in Baltimore said he is confident FERC will “dutifully consider and adopt a rule that will address price formation in the electric markets.”

Other FERC officials have concerns about the DOE proposal. Commissioners Robert Powelson and Cheryl LaFleur each have said the NOPR is not accurate in its characterization of natural gas’ role in grid stability. Some groups have questioned the DOE’s grid stability study from earlier this year, saying it was too supportive of fossil fuel-generated power at the expense of renewables.

Several groups have been vocal in their opposition to the DOE’s proposed plan, which faces a Dec. 11 deadline. Several states weighed in during the comment period for the NOPR, many urging FERC not to adopt the rule.

—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).