Chatterjee pans 'hyperbolic' reaction to his interim NOPR pitch
- The acting chairman of the Federal Energy Regulatory Commission defended his interim plan to save coal and nuclear generators from retirement at his agency's open meeting on Thursday, saying "folks are having a hyperbolic reaction to this because, quite frankly, they don't understand it."
- Chatterjee said his plan, outlined in an interview with Utility Dive on Wednesday, would not threaten renewable energy or natural gas and would be, "at worst," neutral from a carbon standpoint. He said he believes many critics are still debating the Department of Energy's earlier proposal to subsidize baseload plants, but that his interim plan means "we've moved past that."
- Chatterjee also said FERC will soon complete working through its backlog of orders that built up when the commission was without a quorum for nearly six months of the year. Since quorum was restored, FERC has issued 344 notational orders, Chatterjee said, including approvals for the controversial Mountain Valley and Atlantic Coast pipelines.
On Wednesday, Chatterjee revealed details of his interim plan to prop up at-risk coal and nuclear generators while FERC considers a longer-term rule on grid resilience. The acting chairman outlined language of a potential "show cause" order under Section 206 of the Federal Power Act.
The order would require each regional grid operator to provide "interim compensation for existing resources that may provide necessary resilience attributes and are at risk of retirement before the conclusion of the longer-term rulemaking proceeding," Chatterjee said, or "show cause that it not be required to do so."
The announcement sparked immediate responses on social media, with energy lawyers, among others, taking to Twitter to critique the interim plan.
RTOs already explained in their comments why they don't need to implement the NOPR. 'Show cause' proceedings drag on for years. This would not give plants the immediate relief that they want. https://t.co/BYdWGBEfVQ— Ari Peskoe (@AriPeskoe) November 16, 2017
Here's FERC's page of "Order To Show Cause Proceedings": many of them take YEARS to complete. https://t.co/BeC6QQvdny /2— Joel B. Eisen (@joeleisen) November 16, 2017
Chatterjee addressed the "show cause" issue during questions with reporters after the meeting, saying that he was unsure examples given by the lawyers on Twitter "were completely applicable" to his interim solution.
"I think we can do this in short order. The purpose of casting that interim lifeline is to do this in short order so we can work toward the longer term solution," Chatterjee said. "As I stated there as well, my concern about the process dragging on eternally is I want to actually solve this so I want to couple a short term step with a longer term solution."
The acting chairman expressed frustration with the responses to his proposal, saying he was "genuinely confused as to why people find this as controversial as they're claiming it to be."
"Just surveying Twitter last night after [the Utility Dive] story, I don't think anyone actually read the story," Chatterjee said. "I think they just looked at the headline and ran with the headline and read into what they would think it would do."
"I think people just need to calm down," he said. "I think folks are having a hyperbolic reaction to this because quite frankly they don't understand it."
Part of that perceived misunderstanding could stem from lingering qualms with the DOE's Notice of Proposed Rulemaking (NOPR), Chatterjee said, which proposed full cost recovery for merchant plants with 90 days of fuel supply onsite. Chatterjee's interim proposal is meant to keep those fuel-secure plants online while FERC takes a longer look at the resilience issues raised in the NOPR.
"I think part of the problem is that people are still debating the NOPR as it was submitted to us, and what I'm trying to say is we've moved past that and we're moving toward a constructive solution that still answers the questions that [Secretary of Energy Rick] Perry asked on the NOPR."
Chatterjee added that he is "very cognizant" of the critiques of the NOPR, which included claims from former FERC regulators that the proposal would "blow up" organized power markets if enacted. But, he stressed, his proposal is distinct from the DOE proposal.
"What I'm standing here talking about is an interim step coupled with our own long-term rulemaking," he said.
FERC is not the only entity working on baseload compensation issues. Also on Wednesday, the PJM Interconnection — the primary target of the DOE NOPR — announced new plans to alter price formation across the electricity market to preserve “inflexible” generating units such as “coal, nuclear and large gas units.”
Chatterjee said he has not had time to review the proposal with his staff yet, but it seems "in line with conversations we've been having."
"Just from my top-end observation of it, it seems like something that we could look to for a longer term solution that I've proffered," Chatterjee said, "but I still remain committed to doing something in the short term — in the interim — as we work toward some of the long-term issues that PJM acknowledged in the submission yesterday."
Chatterjee said the Thursday FERC meeting will be his last one as commission chair. Kevin McIntyre, confirmed by the Senate last month, is expected to be named to head FERC when he is sworn in next week. Chatterjee reiterated that he has not yet discussed the interim support package with McIntrye or Richard Glick, a former Senate staffer also confirmed to FERC last month, and that he has only had preliminary discussions with the staff of the two other sitting commissioners, Robert Powelson and Cheryl LaFleur.
To float a significant market reform to the press before presenting to other commissioners is an unusual move for a FERC chairman, but Chatterjee said he wanted to ensure the proposal was complete before presenting it to his colleagues.
"I’m hoping that in fleshing this out we will answer the questions and concerns my colleagues have, but I want to get it right first from my perspective and it’s taking some time to do that," he said.
Chatterjee's interview with Utility Dive raised speculation among some observers that he intended to build momentum for his interim NOPR solution before he hands over the gavel to McIntyre. Asked about that at the end of the FERC meeting, the acting chairman referenced his past role as an energy policy advisor to Senate Majority Leader Mitch McConnell (R-KY).
“I studied for eight years under the master of getting these things done," he said.
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