Perry Praises Trump Order but Offers no Details
By Jason Fordney, Amanda Durish Cook and Rich Heidorn Jr.
WASHINGTON — FERC officials and RTO executives still had more questions than answers this week regarding the Department of Energy’s plans for rescuing at-risk nuclear and coal plants.
Shortly before RTO Insider went to press Tuesday morning, FERC Chairman Kevin McIntyre told reporters at the Energy Information Administration Energy Conference in D.C. that he has not been briefed by DOE since President Trump ordered Energy Secretary Rick Perry to prevent further plant retirements.
He spoke minutes after DOE Undersecretary Mark Menezes told reporters at the conference that the department is still working out the details of the plan. He said the department would not necessarily be ordering RTOs and ISOs to purchase energy or capacity from at-risk plants — as was detailed in a DOE memo leaked last week — but that it was one of the options under review. He did not respond when asked why Trump had made the directive last week when the details were uncertain. (See related story, FERC Blindsided by Half-Baked Trump Order.)
“It’s certainly something I am watching very closely, because depending on what direction they go, there could be various implications for FERC and the organizations we oversee,” FERC Commissioner Cheryl LaFleur said in an interview at the Western Conference of Public Service Commissioners in Boise, Idaho, on Monday. “But the devil is in the details in these things — what actually issues.
“I will say when I got here [at the conference], everyone was talking about it, and we’re fairly far from the scene of the action. It’s a big energy story, so we’ll see what this week brings,” LaFleur continued.
Asked about the prospect of legal challenges to the administration’s action, LaFleur observed: “It is pretty easy to file a complaint at FERC if you’re unhappy with something.”
No Details from Perry
Perry commented favorably on Trump’s directive in a speech at a DOE cybersecurity conference in Austin, Texas, Monday but did not elaborate. “Fuel-secure units are retiring at an alarming rate that — if unchecked — will threaten our ability to recover from intentional attacks or from natural disasters,” Perry said. “The president is right to view grid resilience as a serious national security issue, and he’s directed me to prepare immediate steps to stop the loss of these critical resources.”
“At this time, we have seen no official communication from DOE,” said Shawna Lake, MISO’s senior director of communications and stakeholder affairs.
“I saw it when it flew in my inbox Friday,” Craig Glazer, PJM’s vice president of federal government policy, said before speaking at the EIA conference Monday.
FirstEnergy’s Lobbying Bill Revealed
Perhaps the most interesting development in the story Monday came from the Energy and Policy Institute, which published a blog post on a new filing in the bankruptcy case for FirstEnergy Solutions. The 174-page report shows Akin Gump billing FES $3.8 million in fees and expenses during April, including more than $753,000 in fees for “Energy Regulatory Issues” and federal and state “Government Affairs” work.
Including the $230,000 Akin Gump disclosed in a federal lobbying report for January-March, it has billed FES almost $1 million in lobbying expenses since January.
On April 13, for example, lobbyist James Romney Tucker, a former aide to Newt Gingrich, reported a “call to DOE re potential 202c determination” and a “call with White House staff re 202 status.” Tucker alone billed FES $54,312 at $930/hour for his “Public Law & Policy” work during April.
The institute is a self-described watchdog “exposing the attacks on renewable energy and countering misinformation by fossil fuel interests.” Akin Gump is D.C.’s top-earning lobbying firm.
One RTO official who asked not to be identified suggested the administration’s plan may be like the “lifeboat” then-acting FERC Chairman Neil Chatterjee suggested last November in response to DOE’s Notice of Proposed Rulemaking, which the commission rejected in January. Chatterjee had contemplated a “show cause” order requiring grid operators to compensate at-risk resources that provide resilience benefits as an interim measure while the commission conducted a longer-term rulemaking. (See Chatterjee to Push Interim ‘Lifeboat’ for Coal, Nukes.)
Chatterjee had said his plan would not alter RTO dispatch practices or distort markets, though he acknowledged a lot of details remained undetermined. The idea was apparently forgotten after Kevin McIntyre joined the commission in December, replacing Chatterjee as chairman.
RTOs Caught in the Dark
RTO/ISO executives speaking at the Mid-America Regulatory Conference in Kansas City, Mo., Monday had similar reactions to the memo, with all offering assurances that reliability is well under control in their footprints.
Panel moderator and Missouri Public Service Commission Chairman Daniel Hall characterized the memo as a “possible intrusion into the markets” and asked executives for their reactions.
MISO President and Chief Operating Officer Clair Moeller said he thinks an order is unnecessary but added that the RTO keeps out of retirement decisions. He said the decision whether to close a plant in MISO is between the plant owner and the state in the mostly vertically integrated footprint. “We like to say we’re policy takers, not policymakers,” Moeller said.
However, he offered that the proposed 90 days of on-site fuel supply is not a historical standard. “We’ve never had 90 days of coal on site in the 40 years I’ve been in the industry,” Moeller said. He offered that resilience is “how you take the stuff you have and make it work to keep people safe.”
SPP Executive Vice President and Chief Operating Officer Carl Monroe also said his mostly vertically integrated RTO likely won’t see plants directly impacted, though an order could cause energy prices to rise in its footprint.
“I don’t think I get to say that it won’t affect us,” laughed Suzanne Daugherty, PJM’s chief financial officer and treasurer, noting that most states in the RTO’s territory have adopted retail choice.
But she said PJM will exceed its current resource adequacy standards in the foreseeable future. “We’ve done the planning studies, and we’re going to hit targets well above what we were trying to reach.”
The move is a “drastic step” that could become a financial burden for ratepayers, Daugherty said. “Each type of resource, whether it’s intermittent, hydro, coal, nuclear, all have [fuel supply] issues.”
She also said it would be a “challenge” for independent power producers to make queue investment decisions if generators expected to retire instead begin receiving revenue streams. She pointed out that PJM has already initiated a fuel security study to examine how efficiently fuel is delivered to all plant types during times of peak demand.
ERCOT CEO Bill Magness said he is waiting on the full order to understand the possible impacts. “We’re not sure if this is applicable to ERCOT,” Magness said. “The Defense Production Act is not something I’m that familiar with, but I’m learning about it now,” he added, smiling.
“We’re trained to run security-constrained economic dispatch,” Magness said. “And if this [order] fits into security-constrained economic dispatch, well, we can do that.” But he cautioned that fuel security issues — like ensuring rail cars arrive on time — is outside of ISO/RTO control.
PJM’s Glazer told the EIA conference Trump’s directive will “probably complicate” his RTO’s struggle to deal with state nuclear subsidies.
He said he fears a “half slave/half free” industry in which generators dependent on market revenues increasingly compete with those receiving cost-of-service payments or subsidies.
“I’m not sure that’s sustainable, to be honest,” he said. “I worry as we move down this path that we’re ignoring the lessons of the past” — the 1970s, before electric restructuring.