FERC Rule Change Would Bolster Coal and Nuclear Units
David Wagman | September 29, 2017U.S. Secretary of Energy Rick Perry proposed that the Federal Energy Regulatory Commission (FERC) issue a final rule requiring organized electric markets to develop and implement reforms to "fully price" generation resources necessary to maintain grid reliability and resiliency.
A statement issued September 29 says that while the recent staff report to the Secretary on Electricity Markets and Reliability showed that the grid is generally reliable, "market distortions" could threaten its resilience. Perry said that FERC needs to "act swiftly" to ensure that the resiliency attributes of electrical generation from facilities with on-site fuel supplies are fully valued.
(Read "Cheap Natural Gas Hurts Coal and Nukes: DOE Report.")
The proposed rule would allow for the recovery of costs of "fuel-secure generation units frequently relied upon to make our grid reliable and resilient." Eligible units must be able to have a 90-day fuel supply on site. The provision may benefit coal and nuclear generating stations, in particular.
Under the proposed rule, each FERC-approved independent system organization or regional transmission authority would be directed to authorize a tariff to buy electricity from an eligible "reliability and resiliency resource" and recover the costs and a return on equity. The rate would include pricing to ensure that each eligible resource is "fully compensated for the benefits and services" that it provides to grid operations, including reliability, resilience, and on-site fuel assurance, and that each eligible resource "recovers its fully allocated costs and a fair return on equity."
In a separate letter, Perry directed FERC to consider and complete final action on the proposal within 60 days of publication of the notification of proposed rulemaking (NOPR) in the Federal Register.
As an alternative, he urged FERC to adopt the proposed rule immediately with a provision to amend it later after public comment.
As I read it, the proposed rule states that the various units must have the 90-day reserve fuel supply on-site, not the looser "be capable of having". There are statements that generating units currently have reserves of up to 120-days of coal on site, but there does not appear to be any statistical data or summary showing the on-site reserve of all the coal-fired plants in the USA along with the power output of the various plants.
Unfortunately, the text of the letter does not clearly demonstrate that the proposed or announced closings of various coal and nuclear generating facilities will affect the reliability. The text cites data showing that coal and nuclear facilities have had very high outputs, and that the announced closings would withdraw a fairly small (below 10%) portion of their contribution to overall system capacity.
Ideally we would see a simple table giving on-site reserves (0-30, 31-60, 61-90, 91-120 & over 120 days) in one column, the total of plant capacities in another column, and then the total capacities of plants with proposed closings in a third column. This sort of data would be very useful in evaluating the urgency of this proposed rule. If needed or appropriate, this data could be broken down into separate tables for the different RTO's involved, to give better evaluation of regional problems such as the one cited for the polar vortex (a simple data point of the capacity that was used would be a very clear comparison point for evaluation of the data in the tables).
Anyone have this data? --JMM