Federal Energy Regulatory Commission Chairman Kevin McIntyre told reporters Tuesday that he believed Energy Secretary Rick Perry would make "the right decision" as the Department of Energy contemplates steps to preserve coal and nuclear power generation.
The White House June 1 directed Perry to take immediate action to prevent further losses of fuel-secure coal and nuclear power plants that have struggled to remain economic in an energy landscape dominated by cheap natural gas and increased integration of renewable energy resources.
DOE officials have confirmed that using emergency authorities under Section 202(c) of the Federal Power Act and the Defense Production Act is under consideration as one option for addressing baseload retirements and fuel security issues. But the department has not offered any time line for when it would finalize its approach.
Speaking at a Natural Gas Roundtable luncheon Tuesday, McIntyre said any policy action being weighed by a governmental body should never go forward until the legal implications of such action have been carefully considered. "Once that has been undertaken, that amounts to a set of lay markers within which policy decisions can be made," he said.
Talking to reporters after the event, he said the standards for invoking emergency authority to address power issues "are spelled out pretty clearly not only in the relevant statutory provisions but also in DOE's existing regulations."
RIGHT OR WRONG, DECISION IS UP TO PERRY
Characterizing Perry as a smart, talented quick study of energy policy, McIntyre expressed confidence in the energy secretary's ability to review and rule on the grid resilience questions before him. Ultimately, "the law assigns that role to him, so if anyone's going to make the decision -- right or wrong -- it's going to be him. And I trust that he will make the right decision," McIntyre said.
A draft DOE memo leaked May 31 that attempts to justify a national security argument for saving coal and nuclear power plants from retirement stoked concerns among a large swath of the energy industry. Natural gas trade groups, in particular, pushed back against the memo's claims regarding natural gas system vulnerabilities.
Cheaper gas-fired generation presents a key source of competition to vulnerable coal and nuclear plants, and the gas sector has feared that efforts to give a lift to the at-risk generating resources could result in gas-fired units getting squeezed out.
DOE's draft memo referred to a plan that would require grid operators to buy energy or capacity from designated facilities for two years to prevent retirements.
It also asserted that gas pipelines were more vulnerable to cyber and physical attacks, and that disruptions to gas-fired power plants were events with a higher impact and a higher likelihood.
McIntyre said he had not been briefed on the memo, but made clear that DOE had no obligation to do so. He also seemed to question the significance of the leaked document.
'THAT SHOE HAS NOT DROPPED'
"I think it's important for us to remind ourselves that nothing has happened," he told reporters. While the leaked draft offers potential justifications to support exercising DOE's emergency authority, "that shoe has not dropped; we don't know whether it will."
McIntyre added that the grid "generally held up pretty well despite very challenging weather conditions," including last winter's bomb cyclone that rattled the US East Coast.
This and other weather events of late have provided data and analyses on grid performance that indicate, despite some operational challenges, the system performed well, he said. "Of course the system intentionally is designed to anticipate such events and be prepared for them. That's all a part of resilience," McIntyre said.
Regarding FERC's separate review of grid resilience launched in January, McIntyre told luncheon attendees that the commission was looking to answer a number of questions, "including real fundamental ones like what should [resilience] mean for purposes of considering action to shore up resilience."
"Does it mean 90 days of on-site fuel supply at a generator, or is it a more complex answer than that?" he said. With comments from industry under review, he said, "I think most people are in that latter camp."
