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Regulator Wants Electric Grid Planning to Avoid ‘Regrets’

Oct. 27, 2017, 6:09 PM

The U.S. electric grid is resilient and reliable now, but the Federal Energy Regulatory Commission must prepare for future changes to the electricity mix and competitive energy markets, FERC Chairman Neil Chatterjee said.

There aren’t imminent threats to reliability, but “markets change continually,” he told Bloomberg and Bloomberg Environment reporters today.

“Today, we think [natural gas] is going to be cheap for a long time and readily available, but we don’t know what the future holds. What the future impacts to our markets will be, what future policy changes may occur at the state federal level, and I want to be sure that we don’t have any regrets at the end of this process,” Chatterjee said.

Subsidizing Coal, Nuclear

The independent agency is reviewing hundreds of comments on an Energy Department proposal aimed at subsidizing coal and nuclear plants, and action on the proposal is expected by Dec. 11.

The Energy Department directed FERC to act on a proposal that aims to allow generators with a 90-day supply of fuel on site—coal and nuclear facilities—to receive cost-of-service payments that would cover their operating costs. The proposal comes as a growing number of coal and nuclear plants have closed due to difficulty participating in the competitive energy markets against historically low natural gas prices.

Chatterjee said the discussion of long-term planning for the markets is important to have now because he doesn’t want to be in a situation where “we’ve retired assets today because of our immediate market circumstances, and find out down the road that we need them for security, reliability, and for resilience.”

Opponents to the Energy Department proposal say it will distort the competitive energy markets FERC oversees. They include oil and natural gas giants, such as Exxon Mobil Corp. and Devon Energy Corp., as well as free-market think tanks Institute for Energy Research and R Street Institute, consumer advocacy groups, and environmental organizations. Supporters included the Nuclear Energy Institute and the coal mining company Murray Energy Corp. and coal-heavy utility FirstEnergy Corp.

In response to the criticism, Chatterjee said, “I’m a strong supporter of markets, and I don’t want to distort the markets that we have right now.”

To contact the reporter on this story: Rebecca Kern in Washington at rkern@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com

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