In a move that was widely anticipated across the energy industry, the Federal Energy Regulatory Commission (FERC) today issued an order that terminated a notice of proposed rulemaking that had been initiated in October 2017 in response to a demand by Energy Secretary Rick Perry that FERC enact rules to compensate certain resources for what he then termed “grid resiliency.” Today’s order punts the issue of grid resiliency to the organized energy market operators, who now have 60 days to provide FERC with specific information about how those operators are addressing grid resiliency on their respective systems and whether there remain any gaps to address. FERC has thus effectively washed its hands of the Secretary’s proposal, leaving it for the market operators to put an end to (or reshape) the issue of “resiliency.” FERC will consider the information submitted by the market operators, including the public’s response thereto, in taking a more “holistic” look at what “grid resiliency” means and whether anything more must be done about it. The short of it, though, is that FERC seems intent on not arbitrarily tinkering with market forces, refusing in this instance to prop up uneconomic coal and nuclear facilities using payments for loosely-defined and controversial characteristics. Instead, FERC reaffirmed its support for markets and market-based solutions, acknowledging that sometimes the market compels retirements simply because a technology has become uneconomic.
And so while the term “grid resiliency” may not yet leave our lexicon and will be given additional consideration in the months or years to come, I think it’s safe to say that what comes of compensating resources for “grid resiliency”, to the extent it occurs, will look little or nothing like what Secretary Perry had intended.