Nov
21
2017

This Thanksgiving, Resilience & Reliability Still Matter

Opinions about DOE Rick Perry’s bold moves to kick-start the regulatory policy discussion regarding resiliency and reliability of the electric grid are swirling around and piling up like the abundant autumn leaves here in D.C. 

And as energy lobbyists and lawyers gather around Thanksgiving dinner, many of them can give thanks for the plethora of panel discussions, op-eds and client billing opportunities the Section 403 process has yielded just since the end of September. If the process continues to generate an open discussion of what resources are needed to ensure all Americans have affordable, reliable energy across a range of contingencies, and drives to common-sense solutions, then consumers can be the next to give thanks.

After DOE released its Notice of Proposed Rulemaking in late September, FERC established Docket RM18-1-000 with a tight turn-around for initial and reply comments. The response was overwhelming, with hundreds of comments provided. That’s appropriate, as the electricity markets are complicated beasts with tens of thousands of pages of rules, and each state government and corporate player therein is also unique. When the shape and constraints of the physical grid are layered in, the sheer difficulty of finding even the broad outlines of solutions looms large.

Facing a Gordian knot of ideological rhetoric, economic consequences, and politics, current FERC Chairman Chatterjee has kept the momentum going, revealing his ideas for an interim solution that could help keep vulnerable baseload plants online and in reserve until the industry, regulators and congressional stakeholders can purposefully approach solutions.

As winter approaches, his idea is essentially that FERC can use Federal Power Act Section 206 to require RTOs to pay some compensation to nuclear and coal plants that have resilience attributes but also are economically vulnerable to leaving the marketplace before final rules on resilience are sorted out (and litigated). He also contemplates FERC moving to a longer-term rulemaking in 2018.

Stepping away from the economic analyses and rhetoric around this issue, and thinking about Thanksgiving travel as an analogy – millions of consumers will be grateful this week that our interstate highways have extra lanes, and will wish that airlines kept more planes and crews in reserve. When some reach their destinations, they’ll be chagrined at ride-share surge pricing. There is no perfect marketplace for travel, and there isn’t one for electricity either, especially for consumers. FERC and DOE are responsible for making sure that special events and periods of high demand go as smoothly as possible and present as few price shocks and inconveniences for consumers as can be managed.

With new FERC Chairman McIntyre likely seated this week, it remains to be seen whether the resiliency football DOE kicked off and Chairman Chatterjee caught to run a first down will continue down the field, but from where PACE sits, the interim solution and continuing the discussion would rank as a touchdown and extra point for consumers.