The Secretary urged the FERC to issue a final rule requiring its organised markets to develop and implement reforms that would fully price generation resources necessary to maintain the reliability and resiliency of the US grid. Mr Perry commented that a reliable and resilient electrical grid is critical not only to US national and economic security, but also to the everyday lives of American families and that a diverse mix of power generation resources, including those with on-site reserves, is essential to the reliable delivery of electricity, particularly in times of supply stress such as recent natural disasters. Mr Perry added that his proposal will strengthen American energy security by ensuring adequate reserve resource supply and that he looks forward to the FERC acting swiftly on it.
Secretary Perry’s reforms proposal aims to ensure the diversity and reliability of generation supply, boost the resilience of the US grid against outages and maximise resource capacity for times of unusually high demand, including severe weather events.
FERC is charged with regulating the markets in order to ensure the electrical grid meets present and future US power demands. A recent Staff Report to the Secretary on Electricity Markets and Reliability concluded that while the current grid is reliable, market distortions are threatening its resilience and the future of American energy security.
However, the move could actually boost the numbers of coal-fired and nuclear plants that currently act as ‘baseload’ plants. It could therefore may be related to Trump administration fears in the wake of renewable energy generators helping to reduce the numbers of conventional plants as clean energy has assumed a greater share of the American energy mix. On this basis, American environmental groups have described the proposal as a handout to coal and nuclear.
“Rick Perry is trying to slam through an outrageous bailout of the coal and nuclear industries on the backs of American consumers” said Kit Kennedy, director of energy and transportation at the Natural Resources Defense Council. “This radical proposal would lead to higher energy bills for consumers and businesses, as well as dirtier air and increased health problems.”
Perry’s proposal fits neatly into President Trump’s stated intention to support the US coal industry. The view from industry experts, such as Massoud Amin from the University of Minnesota, is that Trump’s fears about threats to resiliency are problems that don’t actually exist.
The American Wind Energy Association (AWEA) is also worried that such measures will upend competitive markets that currently “save consumers billions of dollars a year”.
“The best way to guarantee a resilient and reliable electric grid is through market-based compensation for performance, not guaranteed payments for some, based on a government-prescribed definition” said Amy Farrell, Senior Vice President, Government and Public Affairs, for AWEA. “We look forward to participating in the process as FERC begins to consider the proposed rule.”
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