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Federal Register notice of DOE resilience proposal adds important word: capacity

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Federal Register notice of DOE resilience proposal adds important word: capacity

A small change in the wording of the U.S. Department of Energy's plan to provide more cost support for struggling nuclear and coal-fired power plants could have important implications, or not.

According to the version of the rule initially posted on the Federal Energy Regulatory Commission's website, the DOE's proposal would apply only to those plants that stockpile a 90-day fuel supply, are not subject to cost-based rate recovery, and operate in regions that have FERC-approved independent system operators and regional transmission organizations with organized energy markets. However, the Oct. 10 Federal Register version says those regions must also have capacity markets.

So which version is the correct one? When asked about the discrepancy, a FERC spokesperson said the commission's rulemaking is the one at issue. "You should always focus on what's" posted on the agency's public document system, called eLibrary, the spokesperson said. "That's where FERC's official documents are."

However, late in the day on Oct. 11, FERC issued a notice acknowledging that the proposal published in the Federal Register differed from the version the commission had previously posted on eLibrary and that the Federal Register version supersedes the earlier version. The question then is this: Does it matter?

The PJM Interconnection, ISO New England and New York ISO operate both energy and capacity markets. The Southwest Power Pool and California ISO operate only energy markets, but those regions seemingly have few, if any, plants that would be eligible for full cost recovery under the rule anyway. Most of Texas is not subject to FERC's jurisdiction, and therefore plants located in that state also would not be eligible under the DOE rule.

Where the Federal Register wording could make a difference is for plants operating in the Midcontinent ISO. The entity operates a voluntary capacity market, and whether that market would make plants in MISO eligible for full cost recovery is unclear. But unlike PJM, most of the coal-fired power plants in MISO already are subject to cost-based recovery.

According to S&P Global Market Intelligence data, the U.S. has approximately 263.7 GW of operating coal-fired capacity, with 178.3 GW operating in organized markets. Most of the 60.7 GW of coal-fired capacity in PJM is not subject to cost-of-service regulation, but the opposite is true for the 63.5 GW in MISO and 26.2 GW in the Southwest Power Pool.

The exact language of the rule also could have an impact on the number of nuclear power plants that could be eligible for full cost recovery under its provisions.

But the other caveat is that FERC, as an independent agency, does not have to adopt the exact language of the DOE's proposed rule. The commission could refine the DOE's proposal in any way that it likes, or it could issue a whole new proposed rule that FERC believes would be more appropriate or likely to withstand legal challenges. It also could refuse to issue any rule. (FERC docket RM18-1)