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Off The Grid: FERC Rejects DOE’s Grid Resiliency Pricing Proposal

In December 2017, Secretary of Energy Rick Perry proposed a new rule that sent shockwaves through the energy industry. In response to the financial struggles and potential early retirement of some of the United States’ coal and nuclear power plants, the Department of Energy (“DOE”) issued a Notice of Proposed Rulemaking that asked the Federal Energy Regulatory Commission (“FERC”) to provide additional funding to certain struggling power plants.1 The funding would be extended to plants able to maintain ninety days’ worth of fuel onsite, which tends to heavily favor coal and nuclear plants.2 Perry argued the additional funding was necessary to ensure the resiliency of the power grid–by losing the production capacity of the struggling plants, the grid would be less capable of handling exigencies like cyberattacks or extreme weather events.3

However, in reviewing the proposed rule, FERC found several issues that contributed to the rule’s ultimate rejection by a unanimous vote of 5-0. First, the DOE failed to provide evidence that the retirement of coal and nuclear plants would negatively impact the resiliency of the grid. In fact, the DOE’s own grid reliability study seemed to refute that very notion.4 Furthermore, the DOE did not offer a definition for the term “resiliency,” nor did it offer an explanation for how the term differs from “reliability,” a matter that FERC is already responsible for monitoring.5 Finally, and perhaps most importantly, FERC found that the proposed rule failed to satisfy the statutory requirement under Section 206 of the Federal Power Act. Under that section, a party requesting a change of the existing tariff schedule must show that the tariffs are unjust and unreasonable, and that the proposed remedy is itself a just and reasonable alternative.6

Despite rejecting the DOE’s rule proposal, FERC did not dispose of the matter completely. After terminating the rule proposal, FERC issued an order meant to give the term “resiliency” a more precise meaning, as well as to gather information on how grid operators view and address resiliency. To start the dialogue, FERC offered the following definition of resiliency: “the ability to withstand and reduce the magnitude and/or duration of disruptive events, which includes the capability to anticipate, absorb, adapt to, and/or rapidly recover from such an event.”7 Grid operators were required to submit responses to FERC’s information request by early March 2018, and third parties have one month longer to submit any comments or responses. After receiving all relevant information, FERC will decide whether to take further action regarding this issue.8


  1. Brad Plumer, Rick Perry’s Plan to Rescue Struggling Coal and Nuclear Plants Is Rejected, N.Y. Times (Jan. 8, 2018), https://www.nytimes.com/2018/01/08/climate/trump-coal-nuclear.html

  2. Id. 

  3. See Moore, infra note 5. 

  4. Jeff St. John, FERC Rejects Energy Secretary Rick Perry’s Coal and Nuclear Energy Market Bailout Plan, Greentech Media (Jan. 8, 2018), https://www.greentechmedia.com/articles/read/ferc-rejects-does-coal-and-nuclear-bailout-plan#gs.onIDU2k

  5. John Moore, Electric Grid Resilience and FERC: What Happens Next?, NRDC (Mar. 7, 2018), https://www.nrdc.org/experts/john-moore/electric-grid-resilience-and-ferc-what-happens-next

  6. Brooksany Barrowes et al., FERC Rejects Proposed Grid Resiliency Pricing Rule and Opens Broader Inquiry, Baker Botts (Jan. 9, 2018), http://www.bakerbotts.com/ideas/publications/2018/january/ferc-rejects-proposed-grid-resiliency

  7. Id. 

  8. Id. 

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