Looking for Common Ground with In-Laws this Holiday Season?

What has consumer watchdogs, environmental advocates, oil and gas companies and the Louisiana Public Service Commission all aligned on the same side? Here’s a hint, it’s not bourbon. Sure enough it’s FERC’s new NOPR!

The Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) to essentially subsidize coal and nuclear energy facilities within Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs). Two months ago that sentence wouldn’t have made any sense to me either so let’s break it down quickly.

RTOs and ISOs make sure the cheapest form of power is being used at any given time within their specific region. In Louisiana, we’re part of MISO, which goes all the way up to Canada, meaning that if we get slammed with a nasty hurricane, MISO can send the Louisiana power grid excess energy from Minnesota. Similarly, when Minnesota gets hit with a sub-zero winter, energy from Louisiana can come through for them. Interstate RTOs and ISOs are overseen by FERC, five commissioners appointed by the president, who have recently been presented with a proposed rule from the Department of Energy (DOE).  
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Here’s where the rubber hits the road: the DOE believes that retiring some of our coal and nuclear power plants would reduce grid reliability, despite the agency’s own report failing to identify a clear link between the two. Therefore in order to keep these aging and polluting plants online, their costs need to be competitive within the current energy market or the RTOs & ISOs will not utilize that power, in which case it will be all of us beautiful, electric rate-payers that will be subsidising coal and nuclear energy through increased utility bills to keep the expensive plants operational.

It’s not so surprising that this isn’t sitting well among Louisiana stakeholders. We’ve got some tried and true Southerners arguing the infringement on State’s Rights, we’ve got the good Republicans arguing this would go against the free market, we’ve got the good Democrats citing the inexperience of the executive level of the DOE and we’ve got those crazy liberals down in New Orleans citing a link between campaign contributions and policy. AND, Louisiana is not alone in its opposition. Word on the street is that written comments actually crashed FERC’s website with opposition to the proposed rule.
 
​Here’s a breakdown of the justification:

​According to the DOE, base-load providers that can stockpile 90 days worth of fuel are more valuable to the grid in the event of a natural or man-made disaster and need a pricing structure that recognizes and rewards their ‘resiliency’. The only energy providers that can meet the 90 day requirement are generally coal and nuclear facilities. Therefore, we as electric customers within RTOs and ISOs need to help defray costs to ensure the coal and nuclear power plants stay online.
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​The problem is, no one has been able to prove the validity of that claim. ​Again, even the DOE report failed to find a clear link between renewables and reduced resilience, and additional research suggests that renewable energy on the grid actually acts to strengthen resiliency by diversifying the nation’s generation sources. Now to be fair, I would be short-changing you by discussing this issue without mention of the Polar Vortex of 2014, which is often cited as justification for the need to keep these coal plants online, however during the Polar Vortex, 14 GW of coal capacity was forced offline due to frozen coal piles and 1.4 GW of nuclear was forced offline as well due to the record low temperatures. Similarly during Hurricane Harvey, the coal piles were too wet to move into the boiler. Ironically enough, even under Polar Vortex conditions and hurricane force winds, it’s Demand Response that comes through yet again.
 
The reality is that the facts regarding baseload coal supply and grid resilience just don’t support the justification of subsidies and would leave Louisiana ratepayers paying the high cost for outdated coal in remote regions. This is just another example of a Washington D.C. solution looking for a problem and Louisiana ratepayers should not be on the hook to pay for that pricy, ineffective solution, and that’s something that we can all agree on.

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