FERC evaluating enhanced baseload compensation, Chatterjee writes
- The acting chairman of the Federal Energy Regulatory Commission was set to tell House lawmakers this week that his commission is exploring providing enhanced compensation for generators that provide "essential reliability services," Axios reports.
- A Tuesday hearing on the Department of Energy's grid study was cancelled due to delays from Hurricane Irma, but Axios obtained a copy of Acting Chairman Neil Chatterjee's opening statement in which he says FERC is evaluating "the compensation for providing such services, when appropriate."
- The statement comes after the DOE's grid study called on federal energy regulators to explore how to better compensate generators for their reliability services, a recommendation that became the focus of a nomination hearing for two potential FERC commissioners last week.
Lawmakers delayed from Hurricane Irma forced the House Energy & Commerce Committee to cancel its hearing on the DOE grid study, which was set to feature representatives not only from FERC, but the coal, gas, solar and wind industries as well.
Nevertheless, the witnesses are making headlines, with Axios releasing a copy of Chatterjee's prepared statement on Tuesday morning.
Much of the statement focuses on procedural updates from FERC, but the acting chair also revisited comments on compensation for baseload generators, writing that plants providing essential reliability services may need to be compensated differently.
"[S]tates generally have jurisdiction over the resource mix in their individual states, and ... FERC has generally remained resource- and fuel-neutral in fulfilling its core obligations to ensure the reliability of the bulk-power system and to maintain just and reasonable wholesale electric rates," Chatterjee wrote.
"That said, FERC’s ongoing evaluation of the grid includes the availability of essential reliability services, including the sufficiency of such services, the types of resources for providing such services, and the compensation for providing such services, when appropriate."
The comments echo those Chatterjee gave in an appearance on FERC's podcast, where he said coal plants should be "properly compensated to recognize the value they provide to the system."
In May, FERC convened a technical conference to explore how to maintain power reliability in the face of changing state clean energy policies, and individual market operators like the PJM Interconnection are considering compensation changes for plants as well.
The DOE grid study and its recommendations have loomed large for FERC in recent weeks, dominating the confirmation hearing for Richard Glick and Kevin McIntyre on Sept. 7.
In that hearing, McIntyre, a Republican energy lawyer, told lawmakers that the importance of baseload power "cannot be denied," but that FERC would likely stay away from resource-specific supports.
"FERC is not an entity whose role includes choosing fuels for the generation of electricity," he said. "FERC’s role rather is to ensure that the markets for the electricity generated by those facilities proceed in accordance with law.”
Glick, a Democratic senate aide, said that any enhanced compensation would be a "question of reliability," and that the DOE study showed that is not threatened at present.
"The DOE grid study suggests … that the loss of those technologies — the loss of the baseload generation — has not had an impact on reliability, but ... it's worth looking at and continuously studying," he said.
If FERC does decide reliability is threatened by baseload retirements, legal analysts say it has wide authority to act on compensation.
“They could, for example, come up with some criteria for determining what generating units … are essential for adequacy of future service,” said Andrew Weissman, senior counsel at the Washington law firm Pillsbury. “Then, with respect to those units, they could create a new category to provide cost-of-service recovery, just as they do for reliability must-run units currently, and socialize the costs of providing that cost recovery.”
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