Or…“How to use scare tactics to achieve the desired outcome,” by the U.S. Department of Energy

By Kelly Gerry
Managing Director

There is no disagreement that resiliency of the North American grid is both a necessity and a major challenge, considering the changes to the energy mix already taking place.

There is no disagreement that coal and nuclear are excellent sources of electricity generation during certain events that impair (some) other forms of generation.

Even so, who really believes resiliency and reliability underlie the U.S. DOE’s recently submitted ‘Notice of Proposed Rulemaking’ to the Federal Energy Regulatory Commission (FERC)? C’mon…

WHAT THE PROPOSED RULEMAKING SAYS

In lay terms, the rule says power generation provided by plants that can store potential energy (coal and nuclear) need to be protected from retirements, to ensure grid reliability and resiliency. This issue is so urgent, FERC is being asked to rule within 60 days of the publication of proposed rulemaking.

The Polar Vortex, an extreme weather event in 2014, was cited as a basis for this need. At that time the electrical grid depended on generation slated for retirement in order to maintain grid stability.

WHAT THE PROPOSED RULEMAKING DOESN’T SAY

Coal is a loser. It’s inefficient and bad for the environment. And it is being replaced by less expensive and better energy sources along with technology innovation. Thus coal is having a tough time in the marketplace. However, it has a very strong human base of support (for understandable reasons – people’s livelihoods depend on its use), it has a very strong lobby and the U.S. administration promises that coal will have a comeback.

But coal is still a loser.

So, if you’re the current administration, how do you look good regarding those promises you made? When all you have is a hammer, you start looking for nails. One good nail is that you can pile up coal – 90 days of it to be exact (according to the U.S. DOE, which is more than coal plants actually inventory on site). You can’t pile up natural gas. Wham-o! Good reason to keep coal around!

Wait! I remember living in Canada in really (really) cold weather – and the only thing I could rely on was my natural gas heater and appliances. So, I wonder – did any of the natural gas generation facilities shut down during the GREAT POLAR VORTEX OF 2014? Turns out, the answer is no. Oh, and there’s even more natural gas available now than in 2014.

So obviously the U.S. DOE meant to include the natural gas industry in its commitment to protect the American public from the dastardly Polar Vortex, should it ever come again. Apparently not.

The U.S. DOE’s argument is so obviously disingenuous that I started typing these comments. If the government is trying to keep coal alive, solely to support a region of the country and a sector of the economy that desperately need it – just be honest. Of course, U.S. DOE can’t be forthcoming; FERC wouldn’t then make the desired decision. So instead, it’s just that coal power is a necessity. Right.

RIGHT FOR THE WRONG REASONS?

Are the ‘ends’ of the U.S. DOE’s proposed rulemaking a justification for the means? I believe the answer is no. The consequences of guaranteeing a return for non-marketable generation is a threat to the wholesale markets. Of course there may be exceptions and it may be worthy of serious discussion. In some instances providing cost of service provisions for coal or nuclear facilities may make practical sense. But is the best way to cover exceptions an arbitrary submission of proposed rulemaking, without consultation and with a limited timeline for review by industry and public stakeholders? If the argument is sound, why ram it down the throat of both the majority of industry and the public, other than those directly involved in the coal industry?

OH, AND ABOUT THE POLAR VORTEX

Extreme weather happens. The consequences can be grave but not always preventable. From ice-storms to hurricanes, the grid faces big challenges. However the source of fuel has rarely been a major factor in the significance of the outage. In fact generation represents only about 5% of annual outage time. Damage to transmission and distribution systems is a much greater factor. Yet, we haven’t seen the same bolstering of regulations to ensure that these systems are robust and ready for the next Polar Vortex.

No doubt, the move to renewables has impacted the amount of dispatchable power supply and that is a real concern. But these decentralized systems also come with their own inherent benefits. Let’s use Puerto Rico as an example.

For many years, proposals to stabilize the Puerto Rican electrical grid have been put forth. The grid was unstable and unreliable before the recent hurricane. Would the U.S. DOE’s ruling have improved the situation? No. The vast majority of the generation facilities were diesel oil and coal. How different might today’s situation be, if the long-proposed natural gas pipeline had been constructed from the existing LNG facility to San Juan? Let’s put it this way: Buried pipelines don’t blow away or flood. Rebuild time would have been cut drastically. Now that the entire system needs to be rebuilt? Renewable based distributed generation systems are likely the most effective solution.

As the Puerto Rican people can testify, traditional models for energy supply and distribution are not always dependable. True solutions are rarely driven top-down from a government agency. The U.S. DOE’s proposed rulemaking is certainly no exception.

Follow this link to check out the U.S. DOE’s NOPR for yourself.