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FERC members weigh in on NERC retirement report, McNamee recusals


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FERC members weigh in on NERC retirement report, McNamee recusals

Federal Energy Regulatory Commission members discussed a significant new report on accelerated power plant retirements at the agency's latest monthly meeting Dec. 20, with one commissioner voicing worries over the study's methodology.

But FERC Chairman Neil Chatterjee largely demurred on whether new commissioner Bernard McNamee should recuse himself from certain proceedings before the agency, given his past involvement in a U.S. Department of Energy proposal FERC later struck down.

During the meeting, Commissioner Cheryl LaFleur expressed concerns with a final report that the North American Electric Reliability Corp. released Dec. 18 on how the U.S. electric grid would handle larger-than-expected losses of coal-fired and nuclear generation. Her comments came as FERC continues to examine the resilience of the U.S. bulk power system amid a wave of coal and nuclear plant retirements and sharp growth in natural gas-fueled and renewable energy.

NERC's final report found that four of 10 assessment areas — the Southwest, Rocky Mountain area, Southeast and the Southwest Power Pool — could not have enough generation capacity to maintain planning reserve margins if about 30% of existing coal-fired generation and 45% of nuclear generation retire by 2022. Those losses exceed grid operators' current anticipated retirements by about 91 GW.

The completed report, however, modeled far fewer retirements than a draft assessment from NERC that examined what could happen if about 60% of coal-fired plants retired and 75% of nuclear plants closed by 2022.

Although the final assessment was not predictive and NERC reduced the amount of lost capacity in the outlook, LaFleur said the report still had crucial shortcomings.

"I continue to have concerns about the analysis and conclusion in the reports," LaFleur said. "I believe the assessment has a fundamental flaw in the way its assumptions are created."

LaFleur said NERC evaluated the impact of higher-than-anticipated plant closures but only factored in announced capacity additions in the coming years, creating an "asymmetry in the way they model what's coming out and what's coming in." NERC's analysis also did not properly account for state and regional rules that require generators to evaluate the impacts of a plant retirement before getting approval to close that facility.

"I think we have to make sure that we rely on fact and not projections," LaFleur said.

Chairman Neil Chatterjee told reporters after the meeting that the NERC study was a "thorough document" but just "one data point among many in this complex area." As FERC moves ahead on its resilience review, Chatterjee said he and his fellow commissioners "will all carefully analyze the myriad data points that we have before us."

McNamee recusal requests

Chatterjee also fielded questions on whether FERC member Bernard McNamee, who was sworn in at the agency Dec. 11, should recuse himself from matters affecting rates for financially troubled coal and nuclear plants.

McNamee was a DOE lawyer when Energy Secretary Rick Perry asked FERC for a rule to ensure full cost recovery for plants in wholesale markets that could store at least 90 days of fuel on-site, a request the commission later rejected before launching its grid resilience review. McNamee's involvement in the proposal and subsequent policies the DOE has considered for aiding at-risk generation have prompted calls from environmental groups, lawmakers and others for McNamee to recuse himself from those and related matters before FERC.

The push for recusal even came up during the Dec. 20 meeting. One protester was escorted out of the gathering after standing up and saying McNamee's presence at FERC was "absolutely unacceptable."

But Chatterjee said decisions on recusals are not up to him. "I would defer those questions to commissioner McNamee and the outstanding and ethical legal office here at the commission."

Chatterjee emphasized that FERC ethics officials, not he as a commissioner, can decide if McNamee should step down from certain matters. "I don't have the capacity to deny another commissioner the vote or the ability to participate in a proceeding."

McNamee voted present at the Dec. 20 meeting, explaining that he was there to learn rather than make decisions for now. "I expect to fully participate in the commission proceedings and decisions soon, but for now, I just plan to listen," McNamee said. He also thanked FERC members and staff for welcoming him to the commission, saying the agency's work is "vitally important."

FERC Commissioner Kevin McIntyre was again absent amid ongoing health problems. McIntyre has not voted on a commission order since Oct. 17, but Chatterjee gave no updates on the former FERC chairman's condition.

"I have no comments on Commissioner McIntyre's status," he said.