FERC lauds grid performance in bomb cyclone; PJM pushes price formation in hearing
“Although we are still receiving and reviewing data, it appears that, notwithstanding stress in several regions, overall the bulk power system performed relatively well,” said FERC Chairman McIntyre in his opening testimony.
McIntyre was one of five who testified before the committee. Others included PJM CEO Andrew Ott; ISO-NE CEO Gordan van Welie; Bruce Walker, assistant secretary of the Energy Department’s Office of Electricity Delivery and Energy Reliability; Charles Berardesco, interim president of the North American Reliability Electric Corporation; and Allison Clements, president of Goodgrid. For the most part, they agreed that the lessons learned during the 2014 polar vortex showed forth in the system’s recent performance as a whole.
Baseload resources made up the majority of fuel resources in the two regional markets affected by the storm. Coal production exceeded expectations, stakeholders testified, prompting Sen. Joe Manchin (D-WV) to lay out concerns that the resource wasn’t properly compensated in markets.
But McIntyre noted that coal isn’t without its problems.
“In this recent weather event, we wouldn’t have seen widespread outages absent coal,” he told Manchin. “Coal was not exempt from operation problems.”
Committee Chair Lisa Murkowski (R-AK) asked his personal opinion of the risks posed to resilience by the impending nuclear and coal retirements on “a scale of 1 to 10.”
“We’re probably clearly at a five,” McIntyre told her, underscoring the more optimistic tone about the grid’s performance this winter.
But while the power system performed well, many brought up ongoing pain points, including PJM’s price formation proposal, the performance of coal plants, particularly in the PJM Interconnection and gas constraints in the Northeast.
PJM price formation
Throughout the hearing, PJM CEO Ott emphasized the need to price “online” generation adequately. Essentially, the grid operator’s proposal would raise prices across the RTO to provide incentives to “inflexible” generating units such as coal and nuclear.
Critics have said the proposal is just a backdoor way into preserving those struggling plants, previously the target of the DOE’s failed cost-recovery rulemaking. But Ott said that down the road, the price formation would apply to renewable energy resources as well.
Even so, he stressed the need to ensure fair compensation for plants that ran for extended periods of time, but whose value is not reflected in their prices.
“Each of these [coal, nuclear and gas] bring to the table reliability characteristics,” Ott noted, but “pricing doesn’t always reflect that. I think really this debate, there are coal plants that didn’t run much and those needs to retire. But there are those that are online running every hour and we need to keep those.”
ISO-New England report
New England faced capacity challenges this month when the Pilgrim nuclear facility went offline. The outage stemmed from the loss of one of two power lines feeding into the plant, though there were not local reliability issues. In response, the region ramped up its oil-fired plants and imports from New York to compensate for the loss of power.