Perry grants FERC more time to consider grid rule
Energy Secretary Rick Perry late Friday said federal regulators can have an additional 30 days to reply to his request for power market reforms that would boost coal and nuclear plants.
In a letter to Kevin McIntyre, the new chairman of the Federal Energy Regulatory Commission, Perry set a deadline for FERC of Jan. 10. In doing so, Perry didn’t hide his disappointment.
The secretary reiterated that “urgent action is required” to reform federal rules governing the transmission of electricity across large swaths of the Midwest and East. “I urge the Commission to act expeditiously,” Perry wrote.
Perry had directed FERC to consider compensating coal and nuclear power plants operating in regional markets by providing a guaranteed cost-recovery mechanism. The Energy secretary argues that because those big, centralized plants stockpile coal and nuclear fuel, they improve the electric grid’s resilience during natural disasters or emergencies.
During the next 30 days, Perry said he would examine all of his legal options for taking “remedial action as necessary to ensure the security of the nation’s electric grid.”
McIntyre last week, on his first day in the job, wasted no time asserting his authority as chairman of an independent agency when he said FERC needed another month to consider the issues around Perry’s grid proposal.
Perry had asked in September that FERC act on his suggested notice of proposed rulemaking by today, and McIntyre’s predecessor, Neil Chatterjee, had pledged that FERC would do so. But just hours after taking his oath of office on Thursday, McIntyre wrote to Perry, noting that the secretary can amend his original deadline for action.
The commission has received more than 1,500 comments on Perry’s suggested rulemaking that would compensate certain coal and nuclear plants, McIntyre wrote, adding that two new members — McIntyre and Richard Glick — had also just taken their seats and needed time to catch up.
Glick, the former general counsel to Democrats on the Senate Energy and Natural Resources Committee, was sworn in Nov. 29 to a term ending in June 2022.
Chatterjee had been pushing for the commission to take an “interim” step that would result in immediate cash payments to owners of certain coal and nuclear plants. That option appears unlikely now that two other commissioners, Democrat Cheryl LaFleur and Republican Robert Powelson, are reportedly collaborating on an alternative to Perry’s proposals.
According to press reports, they want FERC to issue a “notice of inquiry” to national grid operators, directing them to respond within 90 days to a series of questions on the resilience of their systems. There would be no promise of cash payment to financially challenged plants.
“Were FERC to reject the idea of propping up coal and nuclear plants and instead order an inquiry into resilience that proceeded along these lines, that would be a great outcome,” said Miles Farmer, clean energy attorney with the Natural Resources Defense Council.
“That outcome is far, far better than anything that directs payments to coal and nuclear plants or resembles the sort of proposal that DOE put forth,” he said.
Robert Murray, the CEO of coal producer Murray Energy Corp. and a top GOP donor, has pitched the idea of “interim relief” or an “interim solution” along the lines of Chatterjee’s stated goal. One of Murray’s largest customers, the utility FirstEnergy Corp. based in Ohio, has said it might sell off some of its fleet if the federal government doesn’t provide direct relief for coal plants. In an era of flat electricity demand, coal-fired generation has struggled to compete in regional power markets with lower-cost natural gas and wind power.
Murray has said a bankruptcy by FirstEnergy’s merchant generation unit would not endanger his company because of an anticipated increase in coal exports. Still, a spokesman for Murray urged FERC to act swiftly on Perry’s effort to shore up the coal industry. “We believe that the sooner this rule is implemented, the better it will be for the American people,” Murray spokesman Gary Broadbent said in a statement.
Devin Hartman, electricity policy manager at the R Street Institute, a free-market think tank, said FERC faces significant political pressure from Capitol Hill and the White House. But even that pressure might not lead FERC to find that its current rules and market tariffs fail to account for electric reliability and resilience.
But getting more information and data on the record through a notice of inquiry, Hartman said, would be a good idea.
“It would be a better outcome than what Perry is asking for,” said Justin Gundlach, staff attorney with Columbia Law School’s Sabin Center for Climate Change Law.
Gundlach faulted Perry for trying to “shoehorn subsidies into the term ‘resilience’ on the weird premise that a pile of coal is resilient.”
The attribute of on-site fuel “is not going to conveniently justify a narrowly targeted subsidy” to plant owners, he said.