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DOE's Perry reluctantly gives FERC more time to act on pricing proposal

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DOE's Perry reluctantly gives FERC more time to act on pricing proposal

Insisting that the Federal Energy Regulatory Commission already has had a "reasonable" amount of time to do so, U.S. Department of Energy Secretary Rick Perry nevertheless agreed to give the commission another 30 days to take final action on his agency's proposal for shoring up financially struggling nuclear and coal-fired generating units.

The original DOE-imposed deadline was Dec. 11. On Dec. 7, FERC Chairman Kevin McIntyre sent a letter seeking the extension, noting that he and another of the commission's five members had been on the job for less than two weeks. In fact, McIntyre had been sworn in to the agency that very day.

But while the chairman said an extension was "critical to afford adequate time for the new commissioners to consider the voluminous record and engage fully in deliberations," Perry maintained that the "better course would be for the commission to adopt the proposal within this reasonable deadline."

"If the commission fails to adopt the proposal within the original deadline for the reasons stated in the extension request, the security of our nation's electric grid will continue to be at risk," Perry wrote.

The DOE in September filed a notice of proposed rulemaking, or NOPR, with FERC in an effort to stave off the retirement of some coal-fired and nuclear generating resources by recognizing and compensating them for their "fuel secure" nature. In particular, FERC was directed to establish new market rules that would provide full cost recovery and a return on investment to generators that stockpile a 90-day fuel supply, are not subject to cost-based rate recovery, and operate in regions with organized energy and capacity markets.

Until McIntyre sent Perry his extension request, FERC had indicated it was on track to act on the proposal (FERC docket RM18-1), at least in some way, by the Dec. 11 deadline. Commissioner Neil Chatterjee, who temporarily took the helm at FERC while waiting for McIntyre to be confirmed and sworn in, crafted an interim plan he said could be used until a more long-term approach is developed to address the concerns raised in the NOPR by providing compensation for generators that exhibit certain resilience attributes.

Like McIntyre, Perry in his letter cited the over 1,500 comments FERC has received in response to the proposal. But McIntyre used them to show why the commission should be given more time before it acts and the energy secretary pointed to them as confirmation of the "threat to the nation's electricity grid" and proof of the urgent need for FERC to move quickly to approve the DOE's proposal.

Indeed, coal and nuclear power supporters largely see it as necessary to prevent the plants from retiring prematurely due to faulty market rules. Many stakeholders panned the proposal, though, insisting it is not needed, will distort the markets and is discriminatory because it favors certain types of generation resources over others. And although the North American Electric Reliability Corp. acknowledged the resilience and reliability benefits of having a diverse generation portfolio, it also said it anticipates no immediate or near-term emergency stemming from the retirement of coal-fired and nuclear power plants.

Despite NERC's assurances, Perry in his Dec. 8 letter recalled that he had "made clear" in September that "there is a problem today and that urgent action is required to reform the commission's market rules."

"I further stated that failure to act expeditiously would be unjust, unreasonable, and contrary to the public interest," the energy secretary added.

So while Perry, however reluctantly, agreed to the requested extension to Jan. 10, 2018, he urged FERC to act before then if at all possible and also said he intends to "continue to examine all options within my authority ... to take remedial action as necessary to ensure the security of the nation's electric grid."