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Client Alert: US DOE Notice of Proposed Rulemaking (RM18-1)

Project

The U.S. Department of Energy (DOE), submitted a Notice of Proposed Rulemaking (NOPR) known as the “Grid Resiliency Pricing Rule” to the Federal Energy Regulatory Commission (FERC) on September 28, 2017. FERC is accepting comments on the NOPR through October 23, 2017.

Region(s)

U.S.

Client Type(s)

All

On September 28, 2017, the U.S. Department of Energy (DOE), submitted to the Federal Energy Regulatory Commission (FERC) a Notice of Proposed Rulemaking (NOPR) known as the “Grid Resiliency Pricing Rule”.With this NOPR, the DOE directs FERC to take final action on its proposal within 60 days (effectively November 27, 2017) or issue an interim rule with a provision for later modification upon consideration of all public comments. The DOE further directs FERC that any final rule adopting this proposal take effect within 30 days of its issuance (potentially as soon as December 27, 2017).

On October 2, 2017, FERC issued the NOPR and set a deadline of October 23, 2017 to submit comments, with reply comments due November 7, 2017.

The proposed rule allows for cost recovery for power plants that are: (1) physically located within a FERC-approved Independent System Operator (ISO) or Regional Transmission Organization (RTO), (2) able to provide essential energy and ancillary reliability services, (3) able to keep a 90-day supply of fuel onsite, (4) compliant with all applicable environmental regulations, and (5) not otherwise subject to cost-of-service regulation to fully recover their cost.

On October 4, 2017, FERC issued a set of questions they would like commenters to address in their comments, including questions related to:

  • Need for reform;
  • Eligibility;
  • Implementation; and
  • Rates.


FERC also asked about issues related to the implementation timeline, burden on applicable ISOs/RTOs to comply, impact on customers, and alternative approaches. Commenters need not answer all questions and may raise other issues not covered in the questions.

The DOE’s proposed rule comes the month following the publication of its “Staff Report to the Secretary on Electricity Markets and Reliability,” which concluded that further actions should be taken to boost compensation for resources considered to be baseload generators that contribute to maintaining system reliability and resiliency.The proposed rule states that the significant amount of retiring coal and nuclear generators and problems with resiliency exposed during the 2014 Polar Vortex are among multiple reasons justifying the need for this additional compensation.

If you’re looking to learn more about the potential impact of the proposed rule on regional ISOs and RTOs, and/or the potential impact on your business, please contact us to continue the conversation.
Marc D. Montalvo
President, Principal Consultant