FERC's review of the country's generation at the behest of DOE should take it down two paths, according to Exelon CEO Chris Crane.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
The first path would be the resilience of the grid system, and how to provide appropriate compensation to facilities that have on-site fuel supplies. In an interview with Platts, Crane asked if natural gas facilities shouldn't somehow be included in that resilience study.
"We support gas' low prices — they are good for the economy. But do we combine the resiliency of baseload with gas?”
He said there should be a "design basis” for resilience, and asked, "what about reliability [of the natural gas supply system], which is not studied right now.”
The second path Crane mentioned was price formation, which, he said, has contributed to the struggling economics of some generating facilities. FERC needs to ask ISOs and RTOs to look at their market designs, he said.
"We need a consensus on a design basis, which will take more time,” Crane said. FERC "could finish looking at price formation in PJM by the middle of 2018, and then finish a design review [on resilience] within a year.”
Energy Secretary Rick Perry told FERC that there was "an urgent problem” that required reforming market rules before more baseload generation was forced into retirement.
DOE set a December 11 deadline for FERC to take action to address this problem, but a request from FERC for an extension was granted and FERC's new deadline is January 10.
What brought DOE to look at these power market issues, Crane said, were the "unintended consequences of subsidies,” which "were price distortions.”
Problems faced by baseload generators involve "more than just low gas prices,” he contended.
Crane acknowledged that under the Trump administration there is now "more conversation on the coal aspect.” He said that energy is not a new area for Perry, and said there is a national security aspect to maintaining a resilient grid.
"We appreciate the DOE's concerns and we support the review. It is long overdue,” Crane said.
In 2016, Exelon detailed plans to close its Clinton and Quad Cities nuclear plants in Illinois, as the facilities were struggling to compete with gas-powered plants because of record low gas prices.
Both those facilities are now due to begin receiving zero-emissions credits from the Illinois Power Agency in January, retroactive to July.
In its third-quarter 2017 earnings statement, Exelon reported that its three nuclear facilities in New York — R.E. Ginna, Nine Mile Point and James A Fitzpatrick, brought in $73 million in ZEC revenue under the state's Clean Energy Standard, which was phased in roughly a year ago.
Exelon has indicated that it would not be adverse to having the two ZEC programs wrapped into any proposal FERC might come up with.
Crane points out that there is a cap on the value of ZECs that acts as consumer protection.
He also said that the ZEC payments to two of the company's six nuclear facilities in Illinois are "enough,” and does not see that program expanding to any of Exelon's four other facilities in the state.
Request a free trial of: Megawatt Daily
Platts Megawatt Daily provides you with timely and relevant North American electric power information. This market report is a valuable asset for any player in electric power and will provide clarity in this dynamic market.Learn More