The utility industry is clamoring more loudly in an election year for energy reforms that Congress and the administration have failed to deliver on, and one independent agency is being eyed to fix it all.
The Federal Energy Regulatory Commission, the nation’s energy market watchdog, is that agency.
The commission, formed from equal numbers of Republicans and Democrats, is seen as the fair, impartial arbiter of where the rubber meets the road on energy policy.
The commission has been paying close attention to how environmental regulations, both state and federal, are impacting the electric grid, including the centerpiece of the president’s climate agenda, the Clean Power Plan.
But the 2016 election season seems to be driving new outcry for the agency to step in and act where states, the administration and Congress don’t seem to have the inclination or will to do so.
John Shelk, president and CEO of the utility group Electric Power Supply Association, told the Washington Examiner that the commission’s oversight of the large wholesale markets that supply much of the nation’s energy are going to be thrust more into the spotlight, given the big challenges the grid faces amid major changes in how consumers get their electricity.
“It’s going to be interesting to see” where the conversation goes as the commission begins addressing some of these problems, Shelk said. FERC has been holding technical conferences and issuing rulemakings to address some of the challenges, but recent remarks by energy CEOs suggest it’s not going fast enough.
One of the big areas for FERC is how it addresses the “broader question” of the changing energy mix in the country, especially in light of what’s happening in the California and European energy markets, Shelk said.
The change he is referring to is driven in part by the rapid shift from coal, as the top source of the nation’s electricity supply, to natural gas that has taken the reigns as the number one fuel for electricity production.
On top of the coal-to-gas switch, is the rapid increase in wind and solar power, which are primarily intermittent sources of electricity that need to be backed up by natural gas plants in order to keep the grid afloat.
California is facing a crisis that highlights some of the hurdles the rest of the nation will face from the resource switch. The Golden State has plenty of solar panels being installed due to its aggressive renewable energy and climate laws, but an unforeseen problem with its natural gas supply could result in Los Angeles going dark if it isn’t careful.
FERC and California state regulators have been watching the problem closely to address an energy shortfall that could result in rolling brown outs and black outs, according to commission officials.
In Europe, the clean energy policies have caused big swings in power production from renewables, which is changing the power market’s structure in unforeseen ways, making it harder for gas and coal plants to continue running. Similar issues have begun to arise in the U.S. as well.
The administration’s climate plan would drive the transition to renewables even faster while forcing more fossil fuel and other conventional power plants to retire sooner, which critics of the plan say would drive up costs and make the grid less stable.
The nuclear industry Thursday said it is lobbying FERC to act more quickly to address these changing policies and markets dynamics, which are making it harder for nuclear plants to remain competitive.
The commission is working on new rules that would move the wholesale electric markets that FERC oversees to adopt changes that the nuclear industry and fossil generators face in light of more intermittent wind and solar. But Marvin Fertel, the president and CEO of the Nuclear Energy Institute, said it needs to speed up the process.
“We don’t see the state or federal system acting fast enough,” Fertel told reporters on a call last week. “What FERC is doing looking at price formation is good, they just need to do it faster.”
Fertel said he has met with the commissioners on a quarterly basis over the last year to drive home this point. More recently, however, Fertel said he has gone straight to a cabinet level official, Energy Secretary Ernest Moniz, to ask for help in prodding FERC.
Fertel said he asked Moniz to push the concern directly with FERC Chairman Norman Bay and “encourage him to raise the sense of urgency.”
“They can be much more helpful as they go down the road,” he said. “There needs to be a greater sense of urgency,” he said, because without it the industry fears it will have to close plants.
A number of nuclear power plants are facing market uncertainty from the unforeseen consequences of federal wind and solar tax credits that encourage “negative prices” in the market, which place financial stress on power plants that don’t have access to the same subsidies to recoup cost.
Other issues impacting the power plants include state mandates that favor renewable energy over nuclear that is also a zero-emission resource.
“One of the policy challenges is to get the attributes of nuclear valued properly in the market,” said Fertel. He said nuclear plants don’t get valued properly for being “clean.”
Many of these issues have been ignored by the Obama administration for the most part, although it says it supports nuclear power as part of an “all-of-the-above” energy policy.
Fertel said if the markets aren’t fixed to properly value nuclear power, or if states decide to prematurely phase out their nuclear plants for policy reasons, it will lead to more expensive renewable resources taking their place and potentially greater risks to grid reliability.
“One of the big things is reliability” in moving to more renewables, he said. “We don’t shut down … when the sun’s not shining and the wind is not blowing.”
Fertel said without nuclear power most of the president’s climate and environmental goals will not be achievable.
