DOE limits NOPR to RTOs with capacity markets as FERC denies extension request
- The Department of Energy's cost recovery rule would only apply to power plants in regions with active "energy and capacity markets," according to a new version of the proposal filed in the Federal Register on Tuesday.
- While the previous version proposed cost recovery for all merchant power plants with a 90-day fuel supply, the new proposal would exclude plants in the Southwest Power Pool, which does not have a capacity market. How the Midcontinent ISO, which has a voluntary capacity market, would be treated is unknown.
- The Federal Energy Regulatory Commission on Wednesday also denied a request from a wide swath of energy stakeholders to extend consideration on the DOE NOPR. FERC gave no justification for its denial.
DOE's Notice of Proposed Rulemaking (NOPR) has created some odd allies of convenience. Natural gas generators, renewable energy developers, electric cooperatives, munis and others joined together last week to ask FERC to extend its consideration timeframe for the controversial rule.
They were joined later by industrial energy consumers and the National Association of Utility Regulatory Commissioners, the association for state utility regulators. The groups argued at least 90 days was necessary to evaluate the rule.
The only entities to openly support FERC's proposed timeline were coal and nuclear generators, which would be the direct beneficiaries of the reforms. Even so, the commission dismissed the motions for extension in just 50 words.
"Upon consideration, the motions of the Energy Industry Associations, Independent Producers, and Industrial Energy Consumers of America for extension of time to file comments are hereby denied," commissioners wrote. "Comments on the Proposal are due on or before October 23, 2017 and reply comments are due on or before November 7, 2017."
The DOE NOPR would provide cost recovery for merchant power plants in wholesale electricity markets that keep 90 days of fuel supplied onsite. But just which wholesale markets it would apply to became less clear in recent days.
The version of the NOPR filed in the Federal Register on Oct. 10 states that cost recovery would apply to merchant plants in ISO and RTO jurisdictions with "energy and capacity markets." The original version of the NOPR, filed Sept. 29 at the FERC eLibrary, said nothing about a capacity market requirement.
Of the six grid operators under FERC jurisdiction, three have capacity markets — ISO-New England, the New York ISO and the PJM Interconnection. The Southwest Power Pool and the California ISO do not have a capacity markets, and the Midcontinent ISO has a voluntary capacity market, making it unclear how the rule would be applied there.
FERC does not comment on ongoing proceedings, but DOE spokesperson Shaylyn Hynes said her agency considers the later version filed in the Register to be the final proposal.
"While both versions accomplish the Secretary’s goal of addressing the underlying market distortions that are threatening grid resiliency, we urge FERC to act upon the version the Federal Register published," she wrote in an email.
Regardless of which proposal regulators scrutinize, most observers expect significant changes to the DOE proposal by the time FERC concludes its rulemaking process. The NOPR's provisions were likely too vague to form the basis of a final rule, analyst said last week, and FERC may use it as a "prompt for comments" that would form the basis of final policy.
Correction: A previous version of this post incorrectly said that California has a capacity market.
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