On Tuesday, former FERC Chairman Norman Bay reflected on the question he said “everyone in FERC world is trying to answer.” That is: What exactly does the Department of Energy’s notice of proposed rulemaking to support coal and nuclear mean for energy markets?
According to Bay, who resigned from his post just after President Trump's inauguration, the proposal would mean “significant” impacts for the industry. In laying out his concerns about the rulemaking, Bay joined a swelling number of prominent critics and skeptics of the NOPR.
“This is a very big deal for markets,” Bay said onstage in Austin at Greentech Media’s Power & Renewables conference. “I do think in the short run it would have the impact of helping out coal and nuclear. But…the economic forces are simply too strong. Prices continue to decline for wind, and solar, and other forms of technology — including energy storage — and I don’t think you can fight that. At the end of the day, I think all you can try to do is slow it down.”
Bay’s comments add to a growing roster of criticisms from the energy industry. Andy Ott, CEO of PJM, has called the idea “discriminatory.” PJM, along with the ISO/RTO Council, filed comments asking FERC to reject the proposal. Dynegy CEO Bob Flexon said the proposal is a “red herring for subsidies.” And as Jeff St. John reported in Greentech Media, nearly everyone outside the coal and nuclear industry has concerns about the proposal.
The costs associated with supporting coal and nuclear plants that stockpile at least 90 days of fuel could range anywhere from $800 million to $3.8 billion a year, depending on the final ruling. Those payouts would significantly alter the electrical landscape, according to Bay.
“If you take that much money out of the PJM market, I’m not sure what’s left for the other resources to compete in the energy market,” he said. “I think it’s for that reason that every [regional transmission organization] and [independent system operator] has filed comments that, in one form or the other, oppose the rulemaking.”
Bay said the vague proposal and short timeline — allowing just 60 days for action to be taken — also chafes against FERC norms.
“Historically, FERC has really sought the comments of stakeholders [and] has really tried to consider them in a very thoughtful way. As we all know, these markets are incredibly complicated and technical,” Bay said. “I’m not sure how you could possibly analyze all the reply comments and really think about the issues in a comprehensive, thoughtful way in an even shorter time period. Frankly, I don’t think it’s in FERC’s interest not to be really thoughtful about this particular proposal.”
Current FERC members have expressed similar unease, with Commissioner Robert Powelson even suggesting he would leave his job if FERC tried to play with market forces.
Both Commissioner Cheryl LaFleur and interim FERC Chairman Neil Chatterjee have stated that any decision will require a great deal of consideration, something the commission is unlikely to be able to accomplish in 60 days. Bay noted that during his tenure, the commission regularly took 12 to 24 months for rulemaking, and sometimes longer. His comments came just as the deadline approached for reply comments, which are due Tuesday.
FERC will soon experience a shakeup that may also complicate the timeline of the rulemaking. On Thursday, the Senate confirmed incoming Chairman Kevin McIntyre and Commissioner Richard Glick. Both have insinuated they favor allowing markets to take their course. The confirmations mean FERC’s roster of commissioners is finally complete.
See how you can save with #Solar Energy http://ow.ly/Xnkg302gEfq