Dive Brief:
- Federal Energy Regulatory Commission member Robert Powelson said Wednesday that his agency will protect the functioning of wholesale power markets in the wake of a new rulemaking proceeding initiated by the Department of Energy to provide cost recovery for coal and nuclear power plants.
- Powelson told an audience of PJM stakeholders that FERC "will not destroy the markets," SNL reports, and Commissioner Cheryl LaFleur later endorsed the statement on Twitter. The pledge comes as former FERC regulators and energy analysts warn the proposal to guarantee cost recovery for generators with 90 days of fuel onsite could lead to an unraveling of wholesale power markets.
- FERC on Wednesday also issued a request for information on the rulemaking docket (RM18-1) outlining topics it would like stakeholders to address in comments, including the need for market reform, eligibility for cost recovery, ratesetting, the fuel supply requirement and more.
Dive Insight:
One of FERC's newest members sought to quell anxiety in the power sector over DOE's cost recovery proposal on Wednesday, telling an audience at the annual meeting of the Organization of PJM States that he would rather quit than vote for a reform that destroys competitive power markets.
"I did not sign up to go blow up the markets," he said, according to SNL.
That sentiment appears to be shared by at least one other commissioner. Shortly after SNL's story was published, Commissioner Cheryl LaFleur posted it on Twitter, writing "great message!"
Great message!
— Cheryl LaFleur (@CLaFleurFERC) October 4, 2017
SNL: FERC's Powelson pledges "not to destroy" energy markets despite DOE directive https://t.co/OSCzjJJREN
Powelson's comments echo warnings from former FERC regulators in the days following DOE's cost recovery filing last Friday. Earlier this week, former FERC Chairman Jon Wellinghoff told Utility Dive the rule would "blow the market up," and former Commissioner Tony Clark said enacting the rule would be "very challenging for the markets."
LaFleur's endorsement of Powelson's pledge suggests that at least two of the three sitting FERC commissioners are open to significant changes to the DOE's Notice of Proposed Rulemaking, which would move merchant power plants with a 90-day fuel supply back to cost-of-service regulation.
Acting FERC Chairman Neil Chatterjee, also confirmed to his position at FERC in August, has not yet weighed in on the NOPR. Last month he told House lawmakers that reforming power markets to better value resilient baseload generators is a top priority for FERC, but said it was premature to detail how the commission would approach the issue.
“We'd have to have a record, we'd have to have a docket, analysis, and then make that determination going forward,” Chatterjee said.
On Wednesday, FERC took a step toward establishing that record, requesting industry input on a variety of issues relating to the DOE NOPR. In a list of 30 questions, the commission queried stakeholders on whether market reform is needed, as well as more specific issues, like how a 90-day supply of fuel should be defined.
Energy lawyers say the DOE proposal is more vague than usual FERC rulemakings, so industry input to the commission could have a significant impact on the final rule.
Renewable energy and gas groups told House lawmakers on Tuesday they are opposed to the DOE proposal, while coal and nuclear groups expressed qualified support. All stakeholders agreed, however, that more work will be needed to define specific provisions of the rules, such as the 90-day fuel supply requirement.
"I just don't know whether it makes sense or not," Paul Bailey, CEO of the American Coalition for Clean Coal Electricity, told Utility Dive after the House hearing. "We have to talk to utilities about how they would feel about it."
Industry groups will have to hurry to compile responses to FERC. The deadline for initial comments is Oct. 23 and reply comments are due Nov. 7.
That expedited deadline increased anxiety among some stakeholders, who feared FERC may try to ram through a major market reform before Thanksgiving. But regulators could also be doing the opposite — fast-tracking the DOE proposal so they can quickly alter or discard it to minimize regulatory uncertainty in the sector.
Whatever their motivations, energy lawyers say FERC risks little in moving quickly.
"There is no legal vulnerability in moving fast, as long as there was time for comments, and an order is issued explaining the logic and facts and law supporting the rule," Scott Hempling, a Georgetown law professor, wrote to Utility Dive. "There is no statutory obligation to grant any amount of time."
