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FERC Ruling Against Propping Up Coal Plants Draws Praise

Arkansas Business // January 9, 2018

by Kyle Massey

The Federal Energy Regulatory Commission's unanimous decision Monday to reject Energy Secretary Rick Perry's plan to subsidize coal and nuclear power plants in a competitive national power market drew general approval from Arkansas energy stakeholders on Tuesday.

In a ruling on grid "resilience," the five-person panel, including four members appointed by President Trump, swatted away proposed Department of Energy rules that would have provided cost recovery for power generation plants with onsite fuel supplies — certain revenue for coal and nuclear plants.

The decision, which is binding for now, was praised by Arkansas renewable energy advocates, transmissions entities like the Southwest Power Pool and even Entergy Arkansas. Entergy, the state's largest electric utility, derives much of its power from Arkansas Nuclear One in Russellville and two coal-fired plants, White Bluff, near Redfield, and Independence, near Newark.

Entergy agreed with a broad cross-section of energy industry trade groups that the FERC was wise to ask regional transmission organizations and independent system operators — the entities that run the power distribution grid — to submit more data so that the commission might "holistically" evaluate any actions needed to ensure grid reliability. That information from the grid operators is due in 60 days.

"At Entergy, we appreciate the focus FERC has place on reviewing and defining grid resilience, and we think the requirement that regional transmission operators and independent system operators submit additional information is appropriate," Entergy said in a statement issued by Kerri Jackson Case, a senior communications specialist.

Paul Suskie, general counsel and executive vice president of regulator policy for Southwest Power Pool, which is based in Little Rock and oversees the electric grid and wholesale power market in 14 states, thanked the FERC.

"SPP applauds FERC's decision and appreciates their commitment, through the opening of a new docket, to continue to ensure our nation's electric grid is both reliable and resilient," Suskie said in a statement. "As with all of FERC's efforts, SPP will be engaged in this new docket."

Trade groups like the American Council on Renewable Energy, the American Petroleum Institute, the Electric Power Supply Association and the Interstate Natural Gas Association of America offered a joint statement endorsing the commission's decision not to adopt Perry's plan, which many free-market advocates viewed as an assault on the balance of competitive power markets that have been moving away from coal-fired electricity in favor of power generated with cheaper natural gas, as well as wind and solar farms.

As reported in the Washington Post, critics said the DOE proposal would have mainly helped a few coal and nuclear companies, and many observers saw the ruling as a setback for the Trump administration.

Katie Niebaum, executive director of the Arkansas Advanced Energy Association, which has grown into a major promote of renewable energy and the Arkansas businesses that work in the field, called the ruling a victory for free markets.

"This ruling is good news for a market-driven system that encourages competition," she told Arkansas Business. "The grid resiliency pricing proposal was a solution in search of a problem, and not consistent with the Department of Energy's own study showing renewable energy sources were not a threat to grid reliability. Advanced energy technologies, in fact, play an increasingly important role in an affordable, flexible and resilient electric power system."

Perry's proposal would have allowed cost recovery provisions for power plants that keep 90 days of fuel on hand. That would leave out renewable energy plants and generators run on natural gas, because their fuels cannot be efficiently stored in the long term.

Part of the DOE argument was that as coal and nuclear plants are retired from the nation's power-generation mix, disasters or national security crises might jeopardize a steady supply of electricity. The regulatory commission members disagreed, and were not convinced that the cost-recovery proposal would actually improve on existing market conditions.

"The law and common sense prevailed over special interests today," John Moore, director of the national Sustainable FERC Project Coalition, said in a written statement. "Secretary Perry's plan would have subsidized coal and nuclear plants with a 90-day fuel supply, yet Perry never explained why those plants were inherently more reliable or resilient."


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