FERC grid reliability and resilience pricing questions

Tuesday, October 10, 2017

U.S. energy regulators have asked for public comment on a rule proposed by the Secretary of Energy that would require organized grid operators to pay certain electric generators for their grid reliability and resilience benefits.

On September 28, 2017, Secretary of Energy Rick Perry directed the Federal Energy Regulatory Commission to consider a proposed rule on an expedited basis.  The proposed rule defines an "eligible grid reliability and resiliency resource" based on criteria including the ability to provide essential energy and ancillary reliability services and to have a 90-day fuel supply on site enabling it to operate during an emergency, extreme weather conditions, or a natural or man-made disaster.  It would requires independent system operators and regional transmission organizations to establish a tariff that provides a " just and reasonable rate" for the purchase of electric energy from such resources including recovery of costs and a return on equity

On October 2, the Commission issued a Notice Inviting Comments, asking interested persons to submit comments regarding the proposal on or before October 23, 2017.  Two days later, Commission staff followed up with a series of questions for public comment.  Questions in that document cover topics including the need for reform, eligibility, implementation, and rates, as well as impacts on consumers.

Some questions posed by the Commission staff in its October 4, 2017 document are general, such as, "What is resilience, how is it measured, and how is it different from reliability? What levels of resilience and reliability are appropriate?"  Others ask for whether commenters agree with references in the proposed rule to the 2014 "Polar Vortex" and "other extreme weather events, specifically hurricanes Irma, Harvey, Maria, and superstorm Sandy," as well as "the retirement of coal and nuclear resources and a concern from Congress about the potential further loss of valuable generation resources" as justifying the need for action.

As previously noticed by the Commission, initial comments on the proposed Grid Reliability and Resilience Pricing Rule in Docket No. RM18-1-000 are due on or before October 23, 2017 and reply comments due on or before November 7, 2017.

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