Energy & Environment

Energy commission head ‘sympathetic’ to parts of proposal to prop up coal, nuclear

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The head of the Federal Energy Regulatory Commission (FERC) said he is “sympathetic” to parts of Energy Secretary Rick Perry’s proposal to prop up coal and nuclear power plants.

But FERC Chairman Neil Chatterjee, whose agency would be responsible for implementing Perry’s plan, told reporters Friday that he would not put in place a policy stemming from the proposal if it would “blow up” competitive electricity markets or not withstand court challenges.

Chatterjee’s comments were the first time he has weighed in on Perry’s proposal from last month.

{mosads}Perry’s plan, officially made in the name of ensuring a resilient electric grid, has rocked the energy world amid charges that it would dramatically overhaul how electricity is sold. It would require that electric grid operators pay coal and nuclear plants for their costs and a fair rate of return if they have 90 days of fuel on-site.

Chatterjee was cautious in commenting on the proposal, and did not fully commit to supporting or opposing any particular action.

“I’m sympathetic to some of the things that Secretary Perry has raised,” Chatterjee said at FERC’s Washington headquarters.

“This idea that there are perhaps attributes that certain generating sources have that have values that are not appropriately being captured by our existing market structure. We need to look at that carefully and examine that and make a determination on whether changes need to be made to continue to enhance the market structure that we have,” he continued.

“I also believe strongly in markets,” he said. “We’ve invested nearly two decades and billions upon billions of dollars in our existing market structure, and I don’t want to do anything to disrupt that market structure. And I also want to ensure that whatever steps the commission takes withstand legal scrutiny and are legally viable.”

Chatterjee, a Republican native of coal-heavy Kentucky who previously was Senate Majority Leader Mitch McConnell’s top energy adviser, said that he’s confident FERC can write a regulation that helps the grid “in a legally defensible manner that doesn’t blow up markets.”

But it may not look much like Perry’s original proposal.

He went on to say that he isn’t even certain that there is a resilience problem with the electric grid that needs FERC action, but he’s committed to using FERC’s processes to figure that out.

“Reliability is not an issue today,” he said. “We have to look at the long term. I think valuing resilience is an extension of reliability, and we have to look to the long term. We don’t know what the future’s going to hold.”

The day before Chatterjee spoke to reporters, Perry defended his proposal to a House panel.

“This has been talked about a lot, but there hadn’t been any action,” he said. “And I want to push the FERC and this country to take action so that we don’t face that event in the future where people’s lives are put into jeopardy or this country’s national security is jeopardized.”

Perry has said he made the proposal merely to begin a “conversation,” and he doesn’t think FERC needs to implement the exact plan.

But he told lawmakers it’s also a “directive,” and he wants FERC to act quickly.

Chatterjee, who learned of Perry’s plan the night before it was released publicly last month, gave an assessment that’s more friendly to it than the two other commissioners on FERC.

Rob Powelson, a Republican commissioner, warned that the proposal could “destroy the marketplace,” and Cheryl LaFleur, the Democratic commissioner, endorsed that assessment.

Perry ordered FERC to take action within 60 days, a deadline that falls in early December. Chatterjee said FERC would stick to that timeline, but the action it takes might not be a final regulation, and could instead be merely extending a comment period, making a new proposal or something similar.

Perry’s proposal has united numerous groups and interests in opposition, including wind, solar, natural gas, some utilities, conservatives and environmentalists.

The coal and nuclear industries and their allies, meanwhile, are vocally supporting it.

Tags Coal Electricity Federal Energy Regulatory Commission Mitch McConnell nuclear Rick Perry

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