This Thing About Coal and Nukes
The U.S. Department of Energy’s proposed rule on grid resilience has existed for two weeks now, and is nothing if not controversial. The rule that DOE would have the Federal Energy Regulatory Commission enact would invent a new “resilience” value based on on-site fuel availability (a 90-day supply, to be specific) that could only (or mostly) be provided by merchant coal and nuclear plants. In the Mid-Atlantic and Northeast, the rule would award these power plants a payment in addition to the clearing price they receive in wholesale energy, capacity and ancillary service markets in order to help them cover their going forward costs and stay in business.
This effective bailout for coal and nuclear plants would provide a life line to power plants that are losing in the market place and therefore uneconomic to keep online. The action would undermine the existence of competitive, technology-neutral wholesale energy markets. In addition, the proposal requires a significant leap in logic from determining that the grid needs something called “resilience,” defining that term as on-site fuel security, and then formulating criteria that ensure only merchant coal and nuclear plants qualify to provide the service.
Sue Tierney, Senior Advisor at the Analysis Group and former DOE Assistant Secretary, and Doug Smith, partner at Van Ness Feldman and former FERC General Counsel, join me to consider the market and legal aspects of DOE’s proposal.
From this episode –
Another good podcast on the issues – GTM’s the Interchange with Ari Peskoe