On Monday, a diverse group of 12 energy industry associations representing oil, natural gas, wind, solar, efficiency and other energy technologies submitted comments to the Federal Energy Regulatory Commission (FERC) in response to the U.S. Department of Energy’s (DOE) proposed rulemaking on grid resiliency pricing. The DOE’s proposal, which was issued by Energy Secretary Rick Perry in late September, has been widely criticized as a “bailout” for coal and nuclear and is currently being reviewed by FERC.
In joint comments, the energy industry associations urged FERC not to adopt the DOE’s proposed rule, which they argue would provide out-of-market financial support to uneconomic coal and nuclear power plants in the wholesale electricity markets overseen by FERC.
Specifically, the energy industry associations’ comments stated the following:
- The DOE’s request for a rule that provides discriminatory compensation to certain coal and nuclear resources is based on a “justification for the proposed payments – resiliency – [which] is not well defined, nor is it demonstrated to be lacking” in the regions that would be affected by the rule;
- The DOE request “fails to provide substantial evidence” for its claim that “RTO/ISO markets do not adequately value fuel security,” and fails to justify its conclusion that “full cost of service payments are therefore needed to prevent ‘early retirement’ of resources with 90 days of on-site fuel supply”;
- Rather, “there is substantial evidence showing that electric systems that lack, or are transitioning to lesser reliance on, coal and nuclear resources are nonetheless operated in a manner that is both reliable and resilient,” and that “outages caused by disruptions of fuel supply to generators appear to be virtually nonexistent.”
- Therefore, the proposed DOE rule would “prop up uneconomic generation that is unable to compete … and that is not otherwise needed for reliability.”
- “Accordingly, the proposed rule has not been shown to be just and reasonable and cannot be adopted by the commission.”
The follow energy industry associations submitted the comments jointly:
- Advanced Energy Economy
- American Biogas Council
- American Council on Renewable Energy
- American Petroleum Institute
- American Wind Energy Association
- Electric Power Supply Association
- Electricity Consumers Resource Council
- Energy Storage Association
- Independent Petroleum Association of America
- Interstate Natural Gas Association of America
- Natural Gas Supply Association
- Solar Energy Industries Association
Several other groups and individual energy companies signed the joint comments, as well.
Separately, a coalition of environmental groups, including the Environmental Defense Fund (EDF), also filed comments Monday against the DOE’s proposal.
In a related statement, Jim Marston, vice president of clean energy at EDF, says, “At its essence, the Department of Energy’s coal bailout aims to create clear winners by sheltering coal and nuclear companies from competitive markets with profit guarantees. But everyone else loses. Americans would pay more on their electricity bills and suffer from dirtier air in return. Our electricity markets – and the companies that compete in it – would be undercut by blatant governmental interference.”
According to EDF analysis, under the DOE proposal the total operating costs that would be paid to eligible coal and nuclear resources could reach over $14 billion. The group claims the public health and environmental impacts associated with the proposal are also staggering, with preliminary EDF analysis finding the net incremental increase in carbon dioxide emissions could reach over 70 million tons annually. This equates to the annual greenhouse gas emissions for more than 13 million passenger vehicles, EDF claims.
Notably, energy and environmental groups aren’t the only ones who have come out against the DOE proposal as FERC considers it. In fact, according to a Washington Post report, eight past FERC members recently filed a letter to their former agency opposing the DOE proposal.
