DOE Urges FERC to Take Swift Action to Address Threats to Grid Resiliency

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DOE formally proposed that FERC take swift action to address threats to U.S. electrical grid resiliency.  Pursuant to his authority under Section 403 of the Department of Energy Organization Act, the Secretary urged the Commission to issue a final rule requiring 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.

 

Why DOE:

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After Department of Energy (DOE) Secretary Rick Perry issued his April 14 memo directing staff to study baseload power concerns, we explained that DOE had authority to direct the Federal Energy Regulatory Commission (FERC) to undertake rulemakings. Secretary Perry is primarily responsible for ensuring the electrical grid meets America’s needs now and into the future and FERC is charged with regulating the markets to achieve that mission. The recent Staff Report to the Secretary on Electricity Markets and Reliability showed that while today’s grid is reliable, market distortions are threatening its resilience and the future of American energy security.

Letter to FERC/NOPR:

The full text of the Secretary’s Letter to the Commission as well as the Proposed Rule are both available at DOE’s website, www.energy.gov.

Quotes on the Issue:

Secretary Perry: “A reliable and resilient electrical grid is critical not only to our national and economic security, but also to the everyday lives of American families. A diverse mix of power generation resources, including those with on-site reserves, is essential to the reliable delivery of electricity—particularly in times of supply stress such as recent natural disasters. My proposal will strengthen American energy security by ensuring adequate reserve resource supply and I look forward to the Commission acting swiftly on it.”

Additional Resources:

Kevin Book/Christine Tezak, ClearView Energy

book@CVEnergy.com; tezak@CVEnergy.com

202-506-5744

Rich Powell, ClearPath Foundation

powell@clearpath.org

Contact: Darren Goode (202-550-6619)

Christopher Guith

US Chamber Global Energy Institute

Contact: Matt Letourneau (202-463-5945)

More Insight From ClearPath:

By urging FERC to establish a new tariff allowing highly reliable and resilient operators (who have 3 months or more of on-site fuel supply in place) to recover their full costs of generation, DOE today takes a historic step to shore up our vital national nuclear fleet.

This approach will work within the wholesale electricity markets as opposed to forcing further bottom-up state action to save the plants -- out of market actions that add further complexity and uncertainty to our already un-level playing field for power. ClearPath hopes this is the beginning of a holistic review of the functioning of the wholesale power markets, which might also include changes to how generators are compensated, as well as formal valuation of clean power.

Some observers may be concerned that this measure compensates all highly reliable sources of power, including unmitigated coal. ClearPath believes that FERC, and the RTOs and ISOs, will be able to design a tariff structure that compensates all highly reliable generators to remain online and ready to run, without necessarily increasing the dispatch of emitting sources like unmitigated coal.

Lastly, we are further encouraged that the Secretary's Notice affirms the value of FERC completing its work on its more incremental price formation reform agenda. ClearPath has been calling for FERC to move ahead rapidly on this price formation reform agenda -- see below:   (Frank Maisano, (202) 828-5864)