The Federal Energy Regulatory Commission today adopted a proposal to change its required analysis of horizontal market power for many sellers seeking market-based rates in the organized wholesale markets it supervises. Chairman Neil Chatterjee called the notice of proposed rulemaking a “small but important step.”
In a press release, FERC said the proposal “safeguards the commission’s ability to prevent the potential abuse of market power by leaving in place other important protections to ensure just and reasonable rates.”
The proposed rule relieves sellers of “indicative screens” for assessing market power established in Order No. 697, passed in 2007, “in any organized wholesale power market that administers energy, ancillary services and capacity markets subject to commission-approved monitoring and mitigation.” The new rule would not apply to the Southwest Power Pool and the California Independent System Operator, which don’t have capacity markets. Sellers in those markets would have to submit the screens under Order No. 697 if they wish to sell capacity, FERC said.
Also at today’s meeting, Commissioner Cheryl LaFleur offered a mild criticism of this weeks report from the North American Electric Reliability Corp., which said accelerating coal and nuclear plants might require “out of market constructs” to keep power flowing. NERC said the potential problems are few and speculative.
LaFleur said she had raised concerns about the analytical assumptions at the NERC November 7 board of trustees meeting, and changes were made as a result. But at today’s meeting, she said she still had concerns. The report, she said, assumes retirements faster than in the past, but considers only formally announced new resources to balance the losses, leading to “too much going out and not enough coming in,” a “fundamental mismatch.” She added that even with that assumption asymmetry, “Not that many resource problems crop up.”
The NERC report has generated considerable criticism, coming in the context of the Trump administration’s failed “resiliency” proposal. Jeff Dennis, general counsel for the business group Advanced Energy Economy said, “As NERC itself states, the report looks at unlikely scenarios that go far beyond either announced or projected power plant retirements to determine at what point there might be some risk for reliability. The report does not provide evidence of any imminent threat to the reliability of the bulk power system. Nor does it suggest that competitive wholesale energy markets aren’t up to the job of ensuring reliability as the resource mix changes,”
Today’s FERC meeting was notable for an absence and a presence. Commissioner and former Chairman Kevin McIntyre was not at the meeting and did not vote on any agenda items. He has not participated in FERC’s open meetings since September and remains at home with serious health issues.
The meeting was the first for newly confirmed Commissioner Bernard McNamee, who in a brief statement said his major goal at FERC will be “listening,” taking all advice, facts, and views into consideration. He voted “present” on the FERC agenda items, noting that he had not been on the commission long enough to participate meaningfully. He was sworn in Dec. 11.
— Kennedy Maize