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FERC Looking at Ways to Compensate Plants for Their Resiliency

 

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As several states most recently New Jersey have taken concrete action to properly compensate nuclear power's zero-carbon attributes, the Federal Energy Regulatory Commission (FERC) told congressional lawmakers this week they are investigating ways for electricity markets to value reliability, while distancing themselves from immediate reform. 

At a subcommittee hearing before the House Energy and Commerce committee, FERC Commissioner Neil Chatterjee gave his reasons for why, in his response to a proposed rulemaking from the U.S. Department of Energy, he had not voted to compensate baseload power plants for their attributes of having fuel on site.

"The record simply did not support compensating plants based on the availability of a 90-day supply of fuel," FERC Commissioner Neil Chatterjee said. "That doesn't mean that [Energy] Secretary Perry didn't ask the right question. The question of resilience that we're examining in this current docket is an essential one. We are going to ultimately have resilience challenges in this country and we need to be prepared for that."

Late last year, Energy Secretary Rick Perry directed FERC to issue a rule requiring electricity markets to develop and implement reforms that would fully compensate generation resources for attributes necessary to maintain the grid’s reliability and resiliency. In an order issued in January, FERC terminated the proposed rulemaking, instead directing regional transmission organizations (RTOs) and independent system operators (ISOs) to assess the resilience of the electricity grid and to recommend additional actions to mitigate any identified issues. During the hearing, FERC Chairman Kevin McIntyre said that the commission had received initial comments from RTOs and ISOs, adding that grid resilience is a ”critical” issue.

”We need to ensure that our markets are properly compensating the resources that we regard as important to ensure the resilience of our grid,” McIntyre said. “We’re looking very hard at these issues now.” Commissioner Richard Glick said that the commission risks overturning the decisions of states - some of which have recently passed legislation compensating nuclear plants for their low-carbon benefits - if it intervenes unduly in electricity markets.

“These electricity markets for the most part don’t take into account externalities, so I think states and the federal government both have a role in ensuring externalities - such as greenhouse gas emissions - need to be addressed,” Glick said. “If state policies are then overturned by FERC decision making, those states are going to cause their utilities to pull out of these [electricity] capacity markets.” Rep. Mike Doyle (D-Pa.) said the recent closures of nuclear power plants are setting off “alarm bells” for those who want to see a reduction in the country’s carbon emissions. Many Pennsylvanians, including myself, are strong supporters of nuclear power. It satisfies reliability issues and is also carbon-free,” Doyle said. “There should be alarm bells going off across the country as we see how many of these plants … are going to be replaced with natural gas or something else that emits greenhouse gases, and make it almost impossible to reach our climate change goals.”

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