Interim FERC Chairman: Coal and Nuclear ‘Need to Be Properly Compensated’ RSS Feed

Interim FERC Chairman: Coal and Nuclear ‘Need to Be Properly Compensated’

One of Neil Chatterjee’s top priorities in his new role as interim chairman of the Federal Energy Regulatory Commission is to ensure coal and nuclear power receive some form of compensation for the “resilience and reliability” benefits they provide to the U.S. electric system.

Resilience and reliability “are essential to national security,” said Chatterjee, in an interview on FERC’s Open Access podcast.

“To that end, I believe baseload power should be recognized as an essential part of the fuel mix,” he continued. “I believe that generation, including our existing coal and nuclear fleet, need to be properly compensated to recognize the value they provide to the system.”

Chatterjee did not expand on what he considers proper compensation to be, but his comments suggest that he supports granting baseload energy resources enhanced payments in the nation’s wholesale power markets. New compensation structures are front of mind for coal and nuclear generators, which have been struggling to compete with low-cost natural gas and cost-effective renewable energy in an environment of stagnant load growth.

Earlier this year, Exelon CEO Chris Crane said there’s never been a more uncertain time in his career than right now, due to the risks facing the nation’s nuclear power fleet. “There are significant challenges with current market design,” said Crane, speaking at the National Association of Regulatory Utility Commissioners’ winter meeting.

“States and locations we serve want affordable and reliable, but also clean, power,” he said. “How you create a market signal around that to adequately compensate all generators within the stack is very important.”

He said he hoped for a solution “with some clarity coming from this administration and some clarity coming from FERC.”

Indeed, the commission has started to grapple with the compensation issue, despite the fact that it hasn’t been fully staffed for six months. In May, Commissioner Cheryl LaFleur spearheaded a technical conference on the interaction between wholesale markets and state-level energy policies, while waiting for FERC to regain a quorum. But the most difficult work still lies ahead.

FERC will need to address the market impacts of nuclear credit programs passed in New York and Illinois that opponents say are artificially suppressing power prices and putting financial pressure on independent power producers. PJM and ISO New England have put forward proposals to bifurcate capacity and pricing to protect unsubsidized coal and gas plants from subsidized nuclear and renewable energy prices, which would benefit independent generators like Dynegy, NRG and Calpine.

Read full article at GreenTech Media