{"id":17004,"date":"2018-01-12T12:18:50","date_gmt":"2018-01-12T17:18:50","guid":{"rendered":"http:\/\/blogs.edf.org\/energyexchange\/?p=17004"},"modified":"2018-01-12T13:14:00","modified_gmt":"2018-01-12T18:14:00","slug":"does-compensation-scheme-for-coal-and-nuclear-is-dead-now-what","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/energyexchange\/2018\/01\/12\/does-compensation-scheme-for-coal-and-nuclear-is-dead-now-what\/","title":{"rendered":"DOE\u2019s compensation scheme for coal and nuclear is dead \u2013 Now what?"},"content":{"rendered":"

\"\"<\/a>In a January 8 Order<\/a>, the Federal Energy Regulatory Commission (FERC or Commission) swiftly dismissed the Department of Energy\u2019s (DOE) proposed out-of-market compensation scheme for coal and nuclear units.\u00a0 DOE\u2019s proposal would have provided guaranteed profits to coal and nuclear plants, despite the fact that these aging units are losing out to more efficient and affordable resources.\u00a0 Instead, FERC took a more measured approach, asking all regional market operators to submit additional information on resiliency issues within 60 days, and providing interested parties an opportunity to respond to those submittals within 30 days. \u00a0Here\u2019s what we can expect next.<\/p>\n

A robust process<\/strong><\/p>\n

The Commission has reasserted its independence and refused to be influenced by Secretary of Energy Rick Perry\u2019s poorly-reasoned proposal, and DOE\u2019s demand that FERC act swiftly without an adequate record.\u00a0 FERC\u2019s order makes clear that while it may take future action on resilience, it will only do so after a complete record and vetting of the issues.\u00a0 FERC\u2019s order provides a list of issues for Regional Transmission Organizations\/Independent System Operators (RTOs\/ISOs) to consider in order to develop a common understanding of resilience. It also sets the stage for developing an understanding how each RTO and ISO currently assesses resilience, and evaluating whether FERC action is warranted.<\/p>\n

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Resilience \u2013 Defined. <\/strong><\/p>\n

DOE asked FERC to compensate certain generators for resiliency attributes without any attempt to define the term.\u00a0 Agreeing with the majority of commenters, including Environmental Defense Fund, that resilience needs to be defined, FERC has proposed for further vetting the following definition of resilience:<\/p>\n

The ability to withstand and reduce the magnitude and\/or duration of disruptive events, which includes the capability to anticipate, absorb, adapt to, and\/or rapidly recover from such an event. <\/em><\/p>\n

Various definitions of resilience have been previously cited by the National Academy of Sciences<\/a> and others, and we can expect commenters to propose further refinements to this definition, especially given that resilience could encompass a range of attributes, characteristics, and services.<\/p>\n

Is there a need? <\/strong><\/p>\n

FERC has asked RTOs\/ISOs to respond to a list of questions to gauge how each currently evaluates resilience and how each mitigates threats to resilience.\u00a0 Market operators will be required to think through the risks associated with resilience and how each currently identifies and plans for those risks.\u00a0 They will also need to explain how existing procedures, market constructs, and standards consider and address resilience.\u00a0 We\u2019ve already received a preview of many of these issues in comments on the DOE proposal:<\/p>\n