FERC Rejects Grid Pricing Proposal; Initiates New Conversation on Resilience

January 9, 2018 | Lynn Abramson, President, Clean Energy Business Network

On January 8, the Federal Energy Regulatory Commission (FERC) rejected a proposal by the Secretary of Energy to require new rate structures favorably pricing electricity generation resources with 90-day onsite fuel storage. The rationale for the Secretary’s proposal was that the retirement of fuel-secure generation from coal and nuclear plants has made the grid more vulnerable to fuel supply disruptions, such as those that arose during the 2014 Polar Vortex. In its Jan. 8 response, FERC determined that the grid pricing proposal had failed to satisfy threshold statutory requirements demonstrating that current tariffs utilized by independent system operators (ISOs) and regional transmission operators (RTOs) are unjust and unreasonable.

FERC also cited a lack of evidence that past or planned electricity generation retirements pose a threat to grid resilience. Finally, FERC noted that a new rate favoring electricity generators with 90-day onsite fuel supply would permit only certain resources to qualify and exclude other resources that may have resilience attributes. FERC recognized, however, that the Commission “must remain vigilant with respect to resilience challenges.” FERC is therefore initiating a new proceeding (Docket No. AD18-7-000) to explore this topic further. This proceeding directs each of the RTOs and ISOs within 60 days to respond to a series of detailed questions to help FERC accomplish the following:

“(1) to develop a common understanding among the Commission, industry, and others of what resilience of the bulk power system means and requires; (2) to understand how each RTO and ISO assesses resilience in its geographic footprint; and (3) to use this information to evaluate whether additional Commission action regarding resilience is appropriate at this time.”

The CEBN welcomes opportunities for open, fuel-agnostic conversations about resilience challenges and solutions, and will keep members informed about ways to engage in this dialogue and any subsequent rulemaking. For further information on the original grid pricing proposal, please see here and listen to this brief podcast interview. To learn more about innovative, clean, and efficient technologies to provide more reliable power and transportation solutions, listen here. Follow @l_abramson on Twitter to hear more from Lynn. Follow the CEBN on TwitterFacebook and LinkedIn to stay connected.

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The Clean Energy Business Network (CEBN) works to advance the clean energy economy through policy, public education, and business support for small- and medium-size energy companies. Started in 2009 by The Pew Charitable Trusts, the CEBN is now a small business division of the Business Council for Sustainable Energy. The CEBN represents 3,000+ business leaders across all 50 U.S. states working with a broad range of clean energy and transportation technologies.