During a hearing before the U.S. Senate, Federal Energy Regulatory Commission members did not affirm the U.S. Department of Energy's view that the nation faces a grid emergency from the loss of coal-fired and nuclear generation.
The June 12 hearing held by the U.S. Senate Energy and Natural Resources Committee frequently focused on the DOE's efforts to secure subsidies and other support for coal and nuclear plants at risk of closure amid competition from natural gas-fired and renewable energy.
Most recently, the DOE created a draft plan that would require grid operators to buy power or capacity for the next two years from "fuel-secure" plants and spur the formation of a strategic generation reserve. The department would compel the action using provisions of the Federal Power Act and the Defense Production Act.
The DOE said such action is necessary to guarantee grid resilience, protect national security and harden the bulk power system against growing cyberattacks. But FERC commissioners did not demonstrate the same sense of urgency at the June 12 hearing.
"Do any of you believe that in the wholesale power markets, we're facing an actual national security emergency," asked Sen. Martin Heinrich, D-N.M.
FERC Commissioner Cheryl LaFleur said she did not, prompting Heinrich to ask if "anyone can answer that with a yes?" The question was met with silence from the four other FERC members.
FERC launched a grid resilience review in January but has so far spurned DOE attempts to prop up uneconomic coal and nuclear plants in competitive markets. The commission instead opted to gather feedback from regional grid operators on what action, if any, the commission should take to ensure grid resilience.
"I'm a little concerned about the narrative that’s being put out there," said FERC Commissioner Robert Powelson, a Trump administration appointee who has said federal market interventions to help coal and nuclear would disrupt organized markets. "We're going to need all these resources, but I don't think it's appropriate to put the FERC in the arena of creating moral hazards in these markets. These markets are working hyper efficiently right now."
Powelson added that a "hard and fast mandate on these markets could really evaporate all the goodwill that consumers have seen, that the environment has seen. To erode that would be a real step back for our U.S. bulk power system."
The DOE's draft plan could also be costly. FERC member Richard Glick said one analysis of the plan estimated electricity costs could rise nationwide by as much as $65 billion.
But several lawmakers voiced frustration with FERC for not doing more to address changes in U.S. power markets, where natural gas is generating a growing share of electricity and new technologies such as energy storage and distributed generation are taking root.
"I have my concerns with the steps that the Department of Energy is reported to be considering, but I also recognize that they are trying to fill a perceived vacuum," Committee Chairman Lisa Murkowski, R-Alaska, said. "I find it unfortunate that prior commissions did not lead more effectively."
Lawmakers from coal states were displeased with FERC’s lack of alarm about the loss of coal-based generation. Sen. Joe Manchin, D-W.Va., noted that residents of his state, which has an 18% poverty level, have seen their average monthly power bills rise from $88.16 in 2009 to $126.10 in 2017.
"I don’t know how y’all think that you’ve kept these prices down," Manchin said. He added that the DOE’s draft plan "is only for 24 months" but "you're acting like it's going to be forever."
The leaked DOE draft plan, dated May 29, was an addendum to an undisclosed order and is not final. The lack of details made FERC commissioners hesitant to provide their views of the proposal. FERC commissioner Neil Chatterjee said he was unsure what the Trump administration intends to do with the memo but that the plan raised important issues, including with respect to fuel supply risks related to natural gas pipeline constraints.
If the DOE ultimately enforces the plan and grid operators disagree with electric generators on rates to support those plants, Chatterjee said that dispute "would obviously fall within our wheelhouse."
Powelson told reporters he was unsure how power plants would be compensated under the DOE draft plan. If the Trump administration invoked the Defense Production Act to keep units online, "wouldn't the Defense Department have to pay for that?" Powelson said. "If it's under the umbrella of national security, then wouldn't we do an emergency defense appropriations bill to address this 24-month window? I don’t know."
He went on to say that FERC is already taking steps to ensure resilience, including issuing a notice of proposed rulemaking on fast-start resources and orders to support energy storage and frequency regulation. "Unfortunately, we're not getting credit for the work that we do," Powelson said.
FERC Chairman Kevin McIntyre said although he sees "no immediate calamity or threat" for the grid, the commission's resilience proceeding will nevertheless take a "longer-term lens" to the future fuel mix and any associated reliability concerns.