Sen. Aument and Sen. White to FERC: Fuel-Secure Baseload Generation at Real Risk

HARRISBURG – Citing the need to maintain a highly reliable and resilient power grid, Senators Ryan Aument (R-36th) and Don White (R-41st) today introduced a concurrent resolution to urge the Federal Energy Regulatory Commission (“FERC”) to act quickly to adopt a recent federal Department of Energy proposed rule that would address the loss of “fuel-secure” power plants from the bulk power system.

“We join the federal Department of Energy in its concern over the loss of some of our nation’s most highly reliable, best performing baseload power plants,” said Sen. Aument.  “There is a growing awareness among many people that the wholesale electric markets are undervaluing these strategic assets which may lead to their premature retirement, which not only threatens reliable power production, but Pennsylvania’s energy economy as well.”

“The federal rule finally recognizes what I have been working hard to promote for many years – our people benefit from energy policies which recognize and value all our resources – including coal and nuclear power production – which are in real danger of disappearing unless action is taken,” said Sen. White.  “Because Pennsylvania is a top producer from both these sources and they provide over two-thirds of our power, we must take action now before it is too late.”

On September 28, 2017, the federal Department of Energy (“DOE”) issued a Notice of Proposed Rulemaking entitled the “Grid Resiliency Pricing Rule,” which directs the FERC to use its authority to impose rules on independent system operators, such as PJM Interconnection, to ensure that certain reliability and resilience attributes of electric generation resources are fully valued.  Noting the urgency of the issue, DOE directed the FERC to take final action on the proposal within 60 days or to issue the rule as an interim final rule immediately.

In its filing, DOE relied on its exhaustive study of the electricity markets that was conducted in August 2017, which became the basis for the current proposal.  DOE noted that:

The resiliency of the nation’s electric grid is threatened by the premature retirements of power plants that can withstand major fuel supply disruptions caused by natural or man-made disasters and, in those critical times, continue to provide electric energy, capacity, and essential grid reliability services.  These fuel-secure resources are indispensable for the reliability and resiliency of our electric grid-and therefore indispensable for our economic and national security.  It is time for the Commission [FERC] to issue rules to protect the American people from energy outages expected to result from the loss of this fuel-secure generation capacity.

“Common sense tells us that if you lose highly reliable power plants that can store their fuel on-site for long periods of time – like baseload coal and nuclear power plants – we are more likely to experience problems,” said Sen. White. 

Sen. Aument cited the 2014 polar vortex as evidence that there is a problem.  “Just a few years ago we nearly lost power in PJM during the polar vortex because of the inability of some generators to produce power when we needed it the most.  While there ultimately were no disruptions, sixty-five million people could have been affected and because power prices skyrocketed, consumers experienced real rate shock.”

The issue of fuel-secure premature retirements has also been raised by the North American Electric Reliability Corporation (“NERC”), which is the FERC-designated Electric Reliability Organization whose mission is to assure the reliability and security of the bulk power system in North America. 

Citing the rapid and significant transformation of the North American electric power system and ongoing retirements of fossil-fired and nuclear capacity, as well as the growth in natural gas, wind, and solar resources, NERC warns that, “Premature retirements of fuel-secure baseload generating stations reduces resilience to fuel supply disruptions.”

Through the concurrent resolution they introduced, Senators Aument and White are encouraging FERC to take seriously what the loss of fuel-secure resources would mean not only to the overall grid, but to Pennsylvania as well.

“Our Commonwealth is a top power producer and fuel-secure baseload generation plants employ thousands of workers in high-paying jobs, contributing significantly to our state and local economies,” said the Senators.

Sen. White noted that Pennsylvania’s coal industry, including coal power plants employs 36,100 full and part-time jobs and adds $4.1 billion in total value to the state’s economy.  He also praised coal plant operators who have spent billions in upgrades to meet stringent environmental standards, helping make the use of coal for power production cleaner.

Sen. Aument offered that Pennsylvania’s nuclear industry, including the state’s five nuclear stations employs 15,900 in-state full time jobs and contributes $2 billion to the Commonwealth’s gross domestic product.  He also noted that Pennsylvania’s nuclear fleet provide more than 93% of the of the state’s emissions-free electricity.

“We are hopeful that FERC will recognize the real value that these resources offer and take the necessary steps to ensure that we consider the long-term impacts to the economy, the environment and consumers should these assets be lost,” said the Senators. 

“While we support competitive energy markets, we also believe that a robust, highly reliable ‘all of the above’ energy policy also makes good sense.  FERC has the ability and responsibility to resolve this issue and it is time for them to act.”

CONTACT:           Jake Smeltz, (717) 787-4420 (Senator Aument’s Office)

                                Joe Pittman (717) 787 8724  (Senator White’s Office)