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FERC's Powelson pledges 'not to destroy' energy markets despite DOE directive

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FERC's Powelson pledges 'not to destroy' energy markets despite DOE directive

Federal Energy Regulatory Commission member Robert Powelson has promised the agency will safeguard competitive wholesale electricity markets on the heels of a U.S. Department of Energy proposal to ensure full cost recovery for certain coal and nuclear power plants.

"We will not destroy the marketplace," said Powelson on Oct. 4 during a speech that drew loud applause and a standing ovation from attendees at the annual meeting of the Organization of PJM States, or OPSI, in Arlington, Va. "Markets have worked well and markets need to continue to work well."

Powelson's defense of both competitive energy markets and FERC's independence follows an unusual Sept. 28 DOE directive for FERC to adopt a new rule requiring market operators to better value reliability, fuel security and resiliency attributes of baseload generation of coal and nuclear power plants.

The DOE proposal (FERC docket RM18-1) would allow nuclear and coal-fired generators operating in states with organized markets to recover their costs plus a return on investment if they have 90 days of fuel on site. Energy Secretary Rick Perry also ordered the regulatory agency to take action within 60 days or issue an interim rule that can be modified later.

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FERC Commissioner
Robert Powelson.

Source: Kyle Fuhrman

"FERC does not do politics. We don't do energy politics," Powelson said in reference to the DOE order and its underlying motives. The Republican FERC commissioner, who was nominated in May by President Donald Trump and approved by the Senate in August, assured OPSI members there is a "robust conversation" in full-swing at FERC and that he is confident a market-friendly resolution will be reached on "some of these thorny issues."

"I'll give Secretary Perry credit; he's trying to be thoughtful in the approach but there's many different approaches on how we can tackle this issue," said Powelson. "I did not sign up to go blow up the markets."

Seeking to further allay fears from state commissioners, grid operators and industry stakeholders over the DOE's notice of proposed rulemaking, Powelson reiterated that he will not support a new rule that undoes organized competitive markets or he would leave FERC. "When that happens, we're done. I'm done; I don't need this job," said Powelson, who previously served on the Pennsylvania Public Utility Commission.

Powelson also said he looks forward to reading the comments submitted to FERC on the NOPR by the state regulatory members of OPSI.

The PJM Interconnection also weighed-in on the DOE proposal. In an Oct. 4 online post, PJM said the pricing and fuel security goals sought by the DOE are best achieved through competitive markets in order to prevent consumers from paying for unnecessary and inefficient resources.

DOE's interest "in ensuring fuel security, resilience and proper pricing of reliability attributes aligns with the efforts underway between PJM and its stakeholders," said PJM. "Recent reforms, including PJM’s capacity performance requirements ... offer confidence that market designs can evolve when needed to ensure secure fuel supplies and improvements to ensure generator availability."

The regional transmission organization, which oversees electricity markets that traverse 13 states and Washington, D.C., also said the scope of FERC's pending price formation rulemaking should be expanded to include more accurate pricing for reliability attributes of all resource types.