Energy Secretary Rick Perry will make “the right decision” on whether to declare a power grid emergency to save money-losing coal and nuclear plants, Federal Energy Regulatory Commission Chairman Kevin McIntyre said Tuesday.
McIntyre, and all other FERC commissioners, before Congress last week dismissed claims by the Trump administration that the reliability of the power grid is facing immediate risk because of planned coal and nuclear plant closures in the next several years.
The Republican FERC chairman refused to endorse any action on its merits, but said Tuesday that he has “trust” in Perry, who has unique authority to declare a grid emergency.
“If anybody is going to make a decision, right or wrong, it’s going to be him,” McIntyre told reporters on the sidelines of a natural gas roundtable in Washington sponsored by the American Gas Association. “The law assigns that role to him. And I trust he will make the right decision.”
He said the Energy Department has not conferred with the commission about impending action and it doesn’t have to. FERC is an independent commission of energy regulators who oversee wholesale electricity markets and review interstate pipeline applications.
“They’ve got no obligation to brief me about it,” McIntyre said.
The Energy Department, according to a leaked memo it drafted, is considering requiring regional grid operators to buy power from select coal and nuclear plants for two years, using executive authority under emergency provisions of the Federal Power Act and the Defense Production Act.
FirstEnergy Solutions, a Ohio utility with coal and nuclear plants facing closure, has asked Perry to use the authority, which the Energy Department can invoke to order certain power facilities to stay open in a crisis.
McIntyre said if the Energy Department were to act using that law, regional grid operators would work with the plants to arrange a payment agreement. If the parties could not reach an agreement, FERC then would get involved to figure out a “just and reasonable” rate.
“We don’t know what’s going to happen,” McIntyre said. “It’s important to remind ourselves nothing has happened yet. If it does [happen], it could well result in the matter coming to us for what looks to us to be fairly straightforward rate proceeding.”
Most of the energy industry and policy experts have said action from Perry could undermine wholesale competitive power markets that produce lower costs for consumers. Expensive coal and nuclear plants are increasingly losing out to cheaper natural gas and renewables in competitive power auctions.
The Trump administration argues that closing coal and nuclear plants, which run around the clock, would leave the power grid vulnerable, because there is a shortage of pipelines to transmit natural gas and renewables such as wind and solar produce power intermittently.
FERC last year rejected a previous version of the Energy Department’s plan to provide special payments to coal and nuclear plants that could store 90 days of fuel on site.
McIntyre Tuesday said there’s been “widespread misunderstanding” about Perry’s initial bid to subsidize coal and nuclear plants, though the commission rejected it. Grid resilience is a “unquestionably valid” issue that needs to be analyzed, he added.
McIntyre reiterated Tuesday that the grid faces no immediate risk and has responded “pretty well” to recent severe weather events, such as the “bomb cyclone” of freezing weather in January.
As he awaits Perry’s decision, he is going out of his way to praise him.
“It’s been my observation from the beginning of his role that he is a very smart man, a very talented man, and a very quick study on energy policy,” McIntyre said. “I have just been a fan of his from day one and remain so.”
