Dive Brief:
- The vice chairman of a House Energy and Commerce subcommittee critiqued the Department of Energy's proposal to provide cost recovery for coal and nuclear plants after a hearing on Thursday, saying the rule could raise costs to consumers.
- Republicans had been largely mum on the proposed rule, but Congressman Pete Olson (R-TX) said he is "concerned" the rule would drive up power prices by "picking winners and losers" for power generation. Olson also noted comments by FERC Commissioner Robert Powelson, who criticized the rule on Wednesday.
- Olson's comments came after his subcommittee heard testimony from consumer advocates and large power consumers decrying the DOE proposal and warning that it would "destroy" the power markets. Secretary of Energy Rick Perry will testify at the committee on Oct. 12.
Dive Insight:
Like its reliability hearing on Tuesday, proceedings at the House Energy and Commerce Committee Thursday morning largely focused on the DOE's proposal to provide full cost recovery to generators with 90 days of fuel supply onsite.
The rule, issued Sept. 29, has sparked widespread outcry in the sector, with former FERC regulators and energy analysts warning it could unravel wholesale power markets.
On Wednesday, FERC Commissioner Robert Powelson sought to calm some of that anxiety, assuring stakeholders at a PJM event in Virginia that FERC "will not destroy the marketplace" and that he would rather quit before voting for a reform that unravels interstate markets.
"When that happens, we're done. I'm done; I don't need this job," he said, according to SNL.
Olson, vice chairman of the energy subcommittee, seized on those comments Thursday.
"That's a strong quote from the guy who's supposed to be tasked with dealing with this," he told reporters after the hearing.
The DOE rule is "a big challenge and a big change," he continued. "I'm concerned because it appears to be picking winners and losers, and every time we do that, we hurt the consumer. We jack prices up."
On Wednesday, consultancy ICF estimated that implementing the DOE rulemaking could cost ratepayers between $800 million and $3.8 billion annually.
Olson said he is confident that he and Perry — both Texans — can "get together, mosey down the road" and figure out a solution. "I'm sure Secretary Perry saw this coming, but we've got to work this out."
Olson's comments came after testimony from consumer groups on the proposed DOE rule. Representatives from the PJM Market Monitor, New Jersey Division of Rate Counsel, Electricity Consumers Resource Council, Public Citizen and Walmart all decried the proposal, saying it would raise costs, cut jobs in other sectors, and unravel the markets.
Reliability and resilience conditions in organized markets today present "no reason to intervene," said PJM Market Monitor Joseph Bowring. Subsidies for any resources are "not necessary to make the grid more reliable," he said, and extending cost recovery to all at-risk merchant plants would "ultimately destroy the market."
Large industrial power customers are "dead set against this proposal," the CEO of the Electricity Consumers Resource Council told lawmakers.
"DOE is saying U.S. manufacturing jobs are not as good as the jobs at economically obsolete coal and nuclear plants," ECRC CEO John Hughes told lawmakers.
Renewable energy and natural gas interests decried the rule before the House committee on Tuesday, while coal and nuclear generators, which store months worth of fuel onsite, expressed approval. Parties have until Oct. 23 to file comments in FERC docket RM18-1.
