Perry Grants FERC’s Request to Delay Grid Resiliency NOPR, But Calls for Urgent Action 

Energy Secretary Rick Perry has granted a 30-day extension sought by Federal Energy Regulatory Commission (FERC) Chairman Kevin McIntyre last week to give the regulatory agency more time before it acts on the controversial proposed Grid Resiliency Pricing Rule. In a strongly worded letter, however, he told FERC to act expeditiously to allay reliability threats to the nation’s electricity grid.

FERC was required to take final action on the Department of Energy’s (DOE’s) September 28-issued notice of proposed rulemaking (NOPR) within 60 days following publication in the Federal Register, which occurred on October 10. Under that timetable, FERC’s vote on the rule would have been required by December 11.

In a letter dated December 7—the same day McIntyre was sworn in as FERC’s chair to replace interim chair Neil Chatterjee—McIntyre said that FERC had received more than 1,500 solicited comments and reply comments on the controversial NOPR. FERC had also sworn in two new members within the past two weeks, returning to its full complement of five members on Thursday for the first time since October 2015, he noted.

“The proposed extension is critical to afford adequate time for the new Commissioners to consider the voluminous record and engage fully in deliberations,” McIntyre said.

In a letter to McIntyre on December 8, Perry gave FERC—an independent regulatory government agency that is officially organized as part of the DOE—until January 10, 2018, to act on the proposed rule. “The Commission is nevertheless authorized to act at any time prior to this deadline, and I urge the Commission to act expeditiously,” Perry wrote.

Perry repeatedly stressed the urgency of the measure, and in bold language, told FERC the rule was necessary “in light of serious threats to the nation’s electricity grid.”

The DOE’s proposed “Grid Resiliency Pricing Rule” directs FERC to exercise its authority under sections 205 and 206 of the Federal Power Act and require that independent system operators and regional transmission organizations “establish just and reasonable rates for wholesale electricity sales” for power plants that show “reliability and resiliency attributes.”

In his letter, Perry wrote that FERC’s “immediate responsibility” is to “take action to ensure that generation resources with onsite fuel supplies and the ability to provide essential energy and ancillary reliability services including voltage support, frequency services, operating reserves, and reactive power are fully valued and, in particular, to exercise its authority to develop new market rules that will achieve this urgent objective.”

Failure to act expeditiously would be “unjust, unreasonable, and contrary to the public interest,” Perry added.

The vast majority of the numerous comments and reply comments submitted by a broad swath of power sector stakeholders—from utilities, industry groups, and state agencies to independent analysts, academics, and environmental organizations—in FERC’s Docket RM18-1 lambasted the DOE’s short timetable to implement a rule many said could alter the nation’s markets significantly. Others contested the rule’s legality and vagueness.

For Perry, however, the sheer number of comments was “substantial evidence of, and otherwise confirm, the threat to the nation’s electricity grid and the urgent need for [FERC] action to reform market rules to preserve fuel-secure generation resources.”

During the 30-day extension, the DOE will meanwhile “examine all options within my authority under the Department of Energy Organization Act, the Federal Power Act, and any other authorities to take remedial action as necessary to ensure the security of the nation’s electric grid,” Perry said.

 

—Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)