On January 8, the Federal Energy Regulatory Commission (FERC) voted unanimously to reject the Department of Energy’s (DOE) proposed rulemaking on grid reliability and resilience pricing. The rule would have provided cost recovery to power plants holding 90 days of on-site fuel supply. Only nuclear and select coal facilities would have qualified. Rather than create a new power market product or refine the pricing rules of existing products, the proposal departed from principles of electricity market design by subsidizing power plants with a specific characteristic.
FERC’s ruling confirmed that both the goal – promoting 90 days of on-site fuel – and the mechanism proposed were not valid approaches to enhancing resiliency and electric market performance. More broadly, FERC noted that grid operators did not identify any past or planned generator retirements that threaten grid resilience and pointed out that numerous reforms have already improved market resiliency. FERC also suggested that reliability and resiliency may be related but separate concepts, with resilience lacking any uniform definition across the industry.
While FERC’s decision terminated the docket on the proposed DOE resiliency rule, it opened another proceeding to evaluate the resilience of the organized wholesale power markets under its jurisdiction. The goals of the new resilience initiative are to:
- Develop a common understanding of bulk power resiliency;
- Understand how organized wholesale electricity markets assess resilience; and
- Evaluate whether additional Commission action regarding resilience is appropriate.