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Rick Perry Gives FERC a 30-Day Reprieve on Coal, Nuclear Cost-Recovery Decision

Energy Secretary Perry gives FERC more time, but repeats unsupported claims on grid security, as photo evidence of the coal industry’s influence on the DOE plan emerges.

Energy Secretary Rick Perry has agreed to give the Federal Energy Regulatory Commission 30 more days to make a decision on a controversial proposal to shore up coal and nuclear power plants in the name of grid resilience, extending a deadline that would otherwise have expired today.

In a Friday letter granting FERC’s request for a deadline extension, Perry repeated unsubstantiated claims that coal and nuclear plants need to be given more money “immediately” to deal with “serious threats to the nation’s electricity grid,” even as evidence of the coal industry’s influence on crafting DOE’s proposal continues to mount.

Perry’s move came a day after newly sworn-in FERC Chairman Kevin McIntyre asked to extend FERC’s review period for the Department of Energy’s notice of proposed rulemaking (NOPR). McIntyre, a Republican and Trump appointee, last week replaced interim chairman Neil Chatterjee, who said in recent weeks that he supports creating an interim rule that could extend some financial support to coal and nuclear plants.

But McIntyre’s letter to Perry indicated that the new chairman was not interested in a rushed interim ruling. McIntyre noted the extreme difficulties for FERC to meet the Dec. 11 deadline, given that it has added two new commissioners, McIntyre and Democrat Richard Glick, in the past two weeks, and is facing more than 1,500 comments on the NOPR.

The NOPR, filed by DOE on Sept. 28 with a 60-day deadline for a decision, asked FERC to provide cost-recovery status for power plants that keep 90 days of fuel on-site — something only nuclear and some coal-fired power plants can do. It claimed this was needed to slow the retirement of these power plants, which it contended are uniquely capable of maintaining grid reliability and resilience against storms, terrorist attacks, and other major disruptions.

But the NOPR has been roundly criticized by trade groups representing every energy industry sector except coal and nuclear power, as well as by independent energy analysts and economists, a bipartisan group of 11 former FERC commissioners and every grid operator in the country.

These groups have pointed out that improving grid reliability would best be served by strengthening the country’s distribution and transmission grids, and maintaining an energy market that promotes a mix of resources, while driving down costs and fostering energy innovation. The NOPR’s cost-recovery plan, by contrast, would promote failing power plants and raise consumer energy prices by billions of dollars, without providing any provable benefits in grid reliability.

Perry’s letter granting the 30-day extension repeats many of the NOPR’s unsupported claims. For example, the letter claims that the record of more than 1,500 comments on the NOPR “provide substantial evidence of, and otherwise confirm, the threat to the nation’s electricity grid and the urgent need for Commission action to reform market rules to preserve fuel-secure generation resources.”

But many of the comments filed with FERC undermine this contention. For example, a study by U.S. power outage data over the past five years indicates that power plant fuel-supply disruptions have been responsible for 0.00007 percent of all power outages in the country.

Even the DOE staff report on grid reliability, ordered by Perry in April and delivered this summer, which has been used as justification for the NOPR, lacks the data to justify the NOPR, according to one of its authors, energy consultant Alison Silverstein.

Opponents have also pointed out the clear influence of coal industry lobbyists on the NOPR, including Murray Energy, the coal mining company owned by Trump supporter Robert Murray. The same is true of FirstEnergy, a Midwestern utility that’s facing severe financial challenges in managing a group of money-losing coal-fired power plants in the region served by grid operator PJM, where the NOPR’s rule change could provide the utility a massive new influx of cash.

Many opponents of the NOPR have said that these coal companies’ needs, rather than regulatory reason, are behind the unprecedented short deadline that DOE gave FERC to make a decision. This week brought more evidence of this link, as The Washington Post published photographs of Perry and Murray embracing during a March 29 meeting to discuss an “action plan” that called for the financial rescue of FirstEnergy’s struggling coal facilities.

Murray has denied any involvement in crafting the DOE NOPR. But he has acknowledged drafting recommendations to the Trump administration, telling The Post, “I think we’ve pointed out the urgency of the problem.”

In his Friday letter, Perry noted that failure to act as fast as possible by FERC would be “unjust, unreasonable and contrary to the public interest.” These phrases match up with the mandate FERC is under, to determine whether today’s market structures are “unjust and unreasonable,” before it considers replacing them with DOE’s alternative.

But the DOE’s NOPR has presented an unusually compressed timeline for crafting a new rule that would radically disrupt the way energy markets run today. It would also go against the principles that have guided the country’s interstate energy markets for more than two decades, as the former FERC commissioners who have come out against the rule have pointed out.

FERC now has a full commission for the first time since late last year, and it’s far from clear that its members will be supportive of DOE’s request for a major change to market rules. Commissioner Cheryl LaFleur, the sole remaining Obama appointee, has joined Trump appointee Rob Powelson in speaking out against the NOPR. McIntyre and newly sworn-in Democrat Richard Glick both expressed their preference for maintaining FERC’s neutrality in managing energy markets during their Senate confirmation hearings.


December 12, 2017 - Posted by | Uncategorized

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