Update: FERC Acts to Support Reliability

Secretary Rick Perry

The Energy Study 

In April, Secretary of Energy Rick Perry announced that he was requesting a study about whether today's electricity markets are doing an adequate job in terms of providing grid reliability, reliance and stability. Under most circumstances, an announcement of such a proposed study would cause everyone to fall asleep. Nowadays, though, this proposed study was considered revolutionary and perhaps obscene.

The general weltanschuang (German used quite deliberately) of studies under the last administration did not encourage looking at questions of mere grid reliability.  The only allowable questions seemed to be: "How can we get more renewables (and gas backup) on the grid?"  When Secretary Perry asked for a reliability study, he set the natural gas industry into a state of shock. They had a pretty good idea of what such a study would show. They didn't like it one bit.

If you think people were upset that this study was performed at all, you can imagine the anger when it showed the value of base-load plants. The DOE study showed a need to increase grid reliability by supporting base-load plants that can store fuel on site. Yes, that means coal and nuclear.

The FERC Rule-Making

After a FERC study is completed, if it shows a need for a change in the electricity markets, the next step is FERC making a rule for the change. FERC starts this process by issuing a Notice of Proposed Rulemaking, (NOPR). FERC recently issued an NOPR for the Grid Resiliency Pricing Rule, based on the DOE study.
Here's the link to the proposed rule: https://www.energy.gov/sites/prod/files/2017/09/f37/Notice%20of%20Proposed%20Rulemaking%20.pdf

The bulk of the rule is on page 11: (FERC shall)...issue a final rule requiring its organized markets to develop and implement market rules that accurately price generation resources necessary to maintain the reliability and resiliency of our Nation's bulk power system.  The proposed rule allows for recovery of costs of fuel-secure generation units frequently relied upon to make our grid reliable and resilient. 

Update: The easiest way to comment on this rulemaking is to use the Nuclear Matters link Urge Policymakers to Protect Nuclear Energy.  You fill out your contact information and click :Submit. There is a pre-written comment on the form, but you can edit it as you wish.  Click the link and submit your comment today or tomorrow!  Time is short. October 23 is the last day for comments.

Beating Back the Attacks

There are so many things to say about this rule-making!  And so many things have been said!  You would think this is the first NOPR that FERC had ever issued.  It isn't.  Here's a brief run through the proposal and the attacks on the proposed rule.

The DOE study:  
I recommend Rod Adams excellent blog post of August 24, Long awaited DOE report on electricity markets and reliability. The post includes links to the study itself.

Is this rule-making legal?  Is it rushed?  
Yes it is legal. Once again, Rod Adams has a good overview: Rick Perry Directs FERC to Complete Final Action on Resiliency Pricing Rule in 60 Days. In Utility Dive's article Powelson: FERC 'will not destroy the marketplace' in cost recovery rulemaking, Acting FERC Commissioner Neil Chatterjee explains that the new rule will have a record, docket, and analysis. Just like the rest of the rules. In the same article,  Scott Hempling, a Georgetown law professor, said there is no statutory obligation for any particular period of time for comments.  My own understanding is that 60 day and 90 day comment periods are pretty standard.

Isn't this "rule" kind of vague?
Yes. It is slightly more vague than usual.  According one of the articles in Utility Dive, energy lawyers say that the vagueness of the rule may give more room for industry input on the final product.   But frankly, it is not out of line with other FERC rule-making.  For example, in FERC 1000, one of the most complex and contentious parts of the rule is stated pretty simply: Local and regional transmission planning processes must consider transmission needs driven by public policy requirements established by state or federal laws or regulations.  FERC rarely tells system operators exactly what to do: FERC directs them to "consider this" or "allow for that" etc.  Kind of vague, but then again, they are the system operators and they have their own constraints.

Is FERC Fuel-Neutral, Part 1:
Former FERC Chairman Jon Wellinghoff said that a proposed rule supporting baseload plants "would blow the market up."  At FERC, according to Wikipedia, Wellinghoff's three priorities were integration of renewables, energy efficiency, and demand-side energy practices, such as real-time pricing.  Wellinghoff didn't mention reliability in his priorities as FERC chairman. I also don't notice that anybody blamed him for supporting the expansion of renewable energy. When some people claim that FERC must be "fuel neutral," they apparently don't mean "treat renewable installations like other power plants."

Is FERC Fuel-Neutral, Part 2:
FERC doesn't like rules that say: Gas plants shall or coal plants shall. For a FERC rule, don't actually name the type of plant.  The new proposed rule doesn't name types of plants.  Any plant that can store 90 days worth of fuel qualifies for recovery of costs of fuel-secure generation units.  FERC and grid operators have many rules for how plants get paid: there's the whole business of ancillary services.  Grid operators pay for ancillary services (reactive power, quick dispatch) even though only certain types of plants can provide these services.  If FERC determines that "fuel security" is important for grid reliability, it can make sure that plants that are able to supply the fuel-security service are paid for that service. This is not revolutionary.

And the final question: Is this going to "blow up the markets"?
There is no market to blow up.  On Friday, Utility Dive quoted Rick Perry saying: There is no free market in electricity. I have been saying this for a while.  I recommend an article by Travis Kavulla, of the Montana Public Service Commission. His article in American Affairs  is titled: There Is No Free Market for Electricity: Can There Ever Be?  It's a good summary of how nobody can "blow up the market" because there really isn't a market.

Finally...

Actually, there is no "finally" because FERC is beginning the rulemaking process, and we won't see the final rule for perhaps 90 days.  That is, 60 days for comments, some more time for putting the final rule together.  But in another way, I can say:

Finally, the government is paying attention to the reliability of the electric grid!

ISO-NE Meeting Features Governor Scott: Minor Update

Vermont ISO-NE Meeting on Transmission
Note: this is a screen shot.  The links in the graphic don't work.

Links for registering for the meeting:

Update: Many people were frustrated because the links in the graphic above do not work.  I had working links available, but they were at the bottom of the post.  I am moving them to the top of the post in this update.

Here are links that work.
Woodstock Inn & Resort
CLG Webpage
Register
Mary "Weezie" Nuara

Note: if you have trouble registering,  I suggest you email Weezie Nuara.  Please register in advance because ISO-NE provides a lunch, and they need a headcount.

Now, back to writing about the meeting itself!

Governor Scott will be special guest at ISO-NE meeting in Vermont

The Consumer Liaison Group (CLG) of ISO-NE holds a public meeting every quarter. On September 7, a little less than two weeks from now, the meeting will be in Vermont. (I am on the Coordinating Committee for CLG.)

I hope you can attend. The meeting is free, and includes a lunch. The CLG is the "consumer's voice" for ISO-NE, and this will be a very special meeting.

Governor Scott will speak. He almost certainly will not speak about nuclear power, but I will never forget that he was one of four Vermont senators who voted in favor of continued operation of Vermont Yankee. You can see a short video of his statement at the time of the vote: it's on my blog post Hello Governor Scott, and Goodbye Shumlin.

FERC Order 1000: A public discussion

The main part of this meeting will be a discussion of FERC Order 1000. This order could lead to huge and expensive changes on the grid, and almost nobody knows about it. The basic idea of FERC 1000 is that grid operator (ISO-NE, for example) can order states to pay for transmission lines that are needed for "policy" not just "reliability."

In the past, if a grid operator showed that a new transmission line was needed for grid reliability, the grid operator could spread the payments for that line throughout the states in the grid region. So the line might be only located in one state, but if it was needed for reliability, all the New England states would bear the cost. The grid operator used clear engineering criteria for "the line is needed for reliability."

With FERC 1000, if a transmission line is needed for "policy," the grid operator can also force the states to share the cost of the transmission line. Say that a state has a policy of bringing in wind power from a neighboring state. That state can now commandeer all the states in the grid to pay for the new line. The line is state "policy," after all. Actually, the grid operator would do the commandeering, but the idea is the same.

In Vermont on September 7, many knowledgeable people will be discussing FERC 1000 in public.  This is a rare and important event.

I have more about FERC 1000 in this blog post from earlier this year. That post is somewhat out of date, since New England States Committee on Electricity (NESCOE)  recently lost their FERC 1000 lawsuit against FERC. A representative from NESCOE will speak at the upcoming meeting.

Nuclear and the Trump Administration: Post at Nuclear Engineering International

NRC Chairman Kristine L. Svinicki and Commissioner Jeff Baran.
NRC photo from 2017 Regulatory Information Conference

Trump and Nuclear

Early this year, Nuclear Engineering International Magazine suggested that I write an article about the future of nuclear energy under the Trump administration.  (The magazine is based in Britain.)

This level of prognostication felt a little above my pay grade!

However,  I managed it, because I worked with an excellent co-author, Dr. Gilbert  Brown.  Brown is  emeritus professor/ director of the nuclear engineering program at University of Massachusetts, Lowell.  He is active in nuclear policy and was a Foster Fellow in the U.S. State Department.  Together, Brown and I wrote the article: Nuclear Power in the U.S.A.  It appeared in the March issue of the magazine.

I call the article "prognostication" because it was published in the March issue of Nuclear Engineering International, and written in February.  A  lot of things were in flux at that point. To quote the description of the article in the magazine itself:

President Donald Trump’s first few weeks in office have been a whirlwind of activity. When it comes to nuclear power, there has been some positive momentum with key industry appointments and initiatives for advanced reactors. What might the future hold? By Meredith Angwin and Dr. Gilbert Brown.

Why this article is different

Doctor Gilbert Brown

Though some parts of our article are now out-of date, most of the article is still relevant. In particular, we pushed some boundaries a little in this article. Many people who read nuclear industry periodicals expect to hear about DOE, NRC and EPA (we covered these agencies).

But many nuclear people are somewhat ignorant of FERC, the Federal Energy Regulatory Commission, which is the commission that oversees the grid as a whole.

Dr. Brown and I covered the effects of the vacancies at FERC.  We felt we needed to expand our article past the "usual suspects."  FERC has so many vacancies on its board right now that it can't hold important meetings or make certain types of rulings.

I think you will enjoy reading our article about nuclear under Trump.  When I linked to it on Facebook, a very knowledgable man commented that it was a GREAT high-level summary article, and more such articles will be required in the future.
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Endnotes about FERC:

In late March, long after we had finished the article, the Washington Examiner looked at possible FERC appointments in an article titled  The Politics of Fixing FERC.

Much of that article has an inside-baseball feel to it. Read it if you choose, but at any event, I think the title of the article ("Fixing FERC")  is an important  statement.  In my opinion, FERC has been  fast-and-free with its mandate, encountering little oversight and almost no press coverage. Most of FERC's actions have been either neutral or not-good for nuclear.

For example,  I keep meaning to write about FERC 1000, but I am every time I get ready to dive into that deep deep sinkhole, I remember that I wrote a book and I should spend  my time publicizing it.  If you want to know more about recent FERC actions, I suggest reading NESCOE's brief in its lawsuit against FERC: the suit is about FERC 1000.   Start reading the brief on page 4.

NESCOE is an association of New England states: New England States Committee on Electricity.  This association is made up of representatives appointed by the New England governors.  I consider NESCOE to be New England's attempt to defend itself against FERC.

NESCOE is rightly concerned that FERC's policy changes will cause states to be forced to pay for other states requirements for transmission lines--lines built for only for state policy purposes.  It is taxation without representation: one state votes in for a state policy, and other states pay for that policy. Before FERC 1000, states only shared the costs for transmission lines that were needed for grid reliability, not for state policy.

Oh heavens.  See what I mean?  I'm heading down the explaining-FERC sinkhole!  Okay! Done with that!  I'm climbing out now! I'll be okay!  Really...I will!

Endnotes about Nuclear Engineering International Magazine 

My most recent blog post based on a Nuclear Engineering International article is Pay for Performance on the U.S. Grid: No help to nuclear

New England Grid Operator Meeting September 15

The purpose of the Consumer Liaison Group (CLG) is to be the voice of the electricity consumer in advising the grid operator, ISO-NE.  As the annual report states: The Consumer Liaison Group (CLG) is a forum for sharing information between ISO New England (ISO) and those who ultimately use and pay for electricity in New England.

The next meeting of the Consumer Liaison Group will be next Thursday, September 15,  in Providence RI. The topic is Energy Infrastructure.  (I am on the Coordinating Committee for the CLG.)

CLG meetings are free, but you should register in advance if you want lunch.  Here's the information.  The graphic is merely a screen shot,  I supply the relevant links below the graphic.  I hope to see some of you there.

Providence Marriott Downtown
CLG webpage
Register

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The following letter was sent  to those who have attended previous CLG meetings. (The meetings are open to the public.)  I was given permission to include the letter in this announcement.
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Good Afternoon,

As a past (and hopefully future!) Consumer Liaison Group (CLG) participant, you may find this information interesting as you consider your attendance at the September 15th CLG meeting in Providence, Rhode Island.  Earlier this week, the six New England Governors joined with five Eastern Canadian Premiers for their 40th Annual Conference.  The Conference, hosted by Governor Charlie Baker of Massachusetts, convened on Sunday and Monday and a variety of regional issues were discussed, including trade, energy diversification, and combating the opioid crisis.  Much of the Governors’ and Premiers’ focus was on energy as the Conference heard from Federal Energy Regulatory Commission Chair Norman Bay, a panel on “Emerging and Innovative Technologies,” and a second panel on “The Benefits and Importance of Diverse Energy Generation.”  While the Conference produced no action items or resolutions, participants and media accounts (see below) alike report productive conversations on a variety of regional energy issues.

In September, the CLG will continue these important discussions.  The CLG will hear from Rhode Island General Treasurer Seth Magaziner and a panel on “Energy Infrastructure Projects Progressing in Rhode Island:  Challenges and Consumer Impacts Regionwide.” Panelists from Deepwater Wind, Invenergy, National Grid, and Spectra Energy will discuss a variety of generation, transmission, and pipeline projects.  The CLG meeting will be held at the Providence Marriott Downtown on September 15, 2016, beginning at noon with lunch.  All are invited to continue this discussion of regional energy issues.

To register for the meeting, please click here.

40th Conference of the New England Governors and Eastern Canadian Premiers: Agenda

• Commonwealth Magazine: Baker Still Wants New Natural Gas Pipelines, Hassan of New Hampshire Raises Environmental Concern; MIT Dean Talks Fusion with Govs, Premiers
• Concord Monitor: New England Governors, Eastern Canadian Premiers Meet
• MassLive: Leaders From New England, Canada Talk Energy, Trade, Opioids
• Stamford Advocate: New England Governors, Eastern Canadian Premiers Meet  

Sincerely,

The CLG Coordinating Committee

Rebecca Tepper (MA)
Chair, Consumer Liaison Group Coordinating Committee
Chief, Energy & Telecommunications Division
Massachusetts Attorney General’s Office

Meredith Angwin (VT)
Director, Energy Education Project
Ethan Allen Institute

Robert Espindola (MA)
Energy Systems Program Manager
Acushnet Company

August Fromuth (NH)
Managing Director
Freedom Energy Logistics

Douglas Gablinske (RI)
Executive Director
The Energy Council of Rhode Island

Agnes Gormley (ME)
Senior Counsel
Maine Public Advocate

Guy Page (VT)
Communications Director
Vermont Energy Partnership

Robert Rio (MA)
Senior Vice President, Government Affairs
Associated Industries of Massachusetts

Joseph Rosenthal (CT)
Principal Attorney
Connecticut Office of Consumer Counsel

Donald Sipe (ME)
Partner
PretiFlaherty

Mary Smith (MA)
Associate Director of Energy Supply & Utility Administration, Harvard University

The CLG is governed by a Coordinating Committee of up to 12 members with no more than four members from any one of the New England states.  The Coordinating Committee sets the agenda for four quarterly meetings each year, which the ISO helps facilitate.  Governance of the Consumer Liaison Group is fully explained in the “CLG Purpose and Structure” document available here.