Power Prices, Regulation, Regulation  -  January 9, 2018

FERC rejects Perry-proposed nuclear, coal bailout

In a move widely regarded as an affirmation the independence of the U.S. Federal Energy Regulatory Commission, the commissioners on Jan. 8  unanimously rejected a proposal from Energy Secretary Rick Perry that would have increased compensation for generators providing baseload power supplies such as coal and nuclear. 

Of the five-person commission, which is intended to operate independently of the U.S. Department of Energy, four commissioners were nominated by President Donald Trump. As Utility Dive reported Jan. 9, citing conversations with energy lawyers and former members of the commission," regulators didn't just kill a coal and nuclear bailout — they preserved FERC's critical policymaking independence." 

Perry's motion was filed at the FERC on Oct. 2, 2017, following the U.S. DOE's formal Notice of Proposed Rulemaking, or NOPR, under the Federal Power Act, which directed FERC to require its organized markets to "develop and implement reforms that would fully price generation resources necessary to maintain the reliability and resiliency of our nation's grid." The proposal had been referred to as the most significant overhaul of the nation's competitive power markets in more than a decade. 

In its decision, while disagreeing with Perry's proposed approach, FERC said it shared his goal of ensuring grid reliability and directed regional transmission operators to provide information to help the commission examine the matter "holistically." From the date of the Jan. 8 ruling, regional grid operators have 60 days to submit related information; following those submissions, FERC has the authority to issue another order, according to a report from The Washington Post. 

Utility Dive reported Jan. 10: 

Approval of the NOPR was a top priority for Secretary of Energy Rick Perry, who argued that the coal and nuclear plants that would benefit from the rule are essential for grid resilience — the ability to "bounce back" from outages. A wide swath of critics, however, said the plan was more about rewarding friends of the Trump administration than protecting the electrical system. Little evidence exists to support the DOE's resilience argument, they said, and moving so many generators into cost recovery could "blow up" wholesale power markets.

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