Or so Secretary Rick Perry and the DOE would have us believe.  Approximately three weeks ago, the DOE made its pitch to FERC and the energy industry that a lack of “resiliency” threatens the U.S. power grid.  The responses are in.  And the shock and bewilderment that immediately followed the release of the Secretary’s surprising proposal has, in some cases, turned into a Comedy Central Roast of Secretary Perry and this fanciful thing called grid “resiliency.”  In just a matter of weeks, over 500 companies, individuals, industry groups, trade associations, and RTOs/ISOs have filed comments. And aside from the unsurprising positive responses from companies that would see financial benefits from the proposal, the response has been overwhelmingly negative.

Besides the usual suspects that one would expect to come out against a proposal to subsidize nuclear and coal facilities, the ISO/RTO Council argued against the proposal, stating bluntly that DOE’s proposal “would degrade the efficiency and effectiveness of existing organized wholesale markets, would provide improper incentives and disincentives to current and future market participants, would not promote the goals stated in the NOPR (i.e., enhancement of electric reliability and resilience), and would reverse the progress the Commission and the nation’s [RTOs] and [ISOs] have made in developing robust and reliable competitive markets.”  The National Association of Regulatory Utility Commissioners argued that the proposal could usurp state jurisdiction over generation and seeks to push through a significant change in policy without sufficient study. A group of former FERC Commissioners even joined together to question the proposal.  And one individual shed formalities and offered that Secretary Perry had been correct when he once suggested that the DOE should be abolished—ouch.

Even among coal and nuclear interests, there was not uniform agreement on DOE’s grid policy. For example, Exelon (which is already set to receive subsidies from New York and Illinois for its nuclear facilities) attacked the PJM tariff and advocated for changes to RTO/ISO price formation, but did not actually recommend that the DOE’s proposal be adopted. In contrast, FirstEnergy (which has faced rejection from Ohio regarding nuclear subsidies) argued for the DOE proposal to be adopted largely as written.

While FERC followed DOE’s timeline for receiving comments on the proposal, it remains to be seen if FERC will issue a final order on DOE’s timeframe and what would be included in any such final order. Commissioner Powelson (who was previously Chairman of the Pennsylvania Public Utility Commission) has already said that FERC “will not destroy the marketplace” in ruling on DOE’s proposal—a statement that was endorsed by Commissioner LaFleur. Acting Chairman Chatterjee (who was previously an aide to Senator McConnell of Kentucky) has similarly stated that FERC will not “blow up the market.”

 

Reply comments are due on November 7, so stay tuned.

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Photo of Jason Johns Jason Johns

Jason Johns advises independent power producers, utilities, investors, and large users of gas and power resources with matters arising in power markets and state and federal energy regulatory arenas. Jason appears regularly in proceedings before the Federal Energy Regulatory Commission and in negotiations…

Jason Johns advises independent power producers, utilities, investors, and large users of gas and power resources with matters arising in power markets and state and federal energy regulatory arenas. Jason appears regularly in proceedings before the Federal Energy Regulatory Commission and in negotiations at the ISO/RTO level, where he represents independent power developers and utilities. His experience includes negotiating major facility contracts, such as interconnection, transmission, and power purchase agreements; prosecuting disputes at FERC; and counseling and defending clients on issues related to regulatory compliance.

Jason also works closely with large commercial and industrial users of electricity and gas, such as aerospace companies, pulp and paper mills, steel mills, and tech company data centers. In that role, Jason helps clients negotiate power and gas supply contracts, interstate pipeline capacity asset management agreements, and pipeline bypass agreements. Jason has also assisted these clients with demand management agreements, the installation of on-site resources (such as battery storage, fuel cells, and solar PV), and with retail and wholesale power purchase agreements for renewable energy and other resources. Jason also serves as a board member of The Climate Trust, a national leader in carbon offset projects and innovative climate change solutions.

Jason and his wife are parents to two growing boys, and they live just outside of Portland, Oregon.

Click here for Jason John’s full bio.

Photo of Jennifer Mersing Jennifer Mersing

Jennifer Mersing, an attorney in Stoel Rives’ Energy & Regulatory group, focuses her practice on electric regulatory issues including Federal Energy Regulatory Commission (FERC) and certain state law matters. She advises electric utilities, transmission providers, large industrial consumers of power and energy…

Jennifer Mersing, an attorney in Stoel Rives’ Energy & Regulatory group, focuses her practice on electric regulatory issues including Federal Energy Regulatory Commission (FERC) and certain state law matters. She advises electric utilities, transmission providers, large industrial consumers of power and energy marketers regarding issues under the US Federal Power Act (FPA), the Public Utility Regulatory Policies Act of 1978 (PURPA), and the Public Utility Holding Company Act (PUHCA).