Reed Smith Client Alerts

Comments on the Department of Energy’s (“DOE”) Notice of Proposed Rulemaking (“NOPR”) on Grid Reliability and Resilience Pricing were submitted October 23, 2017. More than 450 entities and individuals filed comments addressing various issues raised by the NOPR. Overall, it appears that the DOE has indeed started a fulsome debate regarding grid reliability and resiliency, adding to the discussion already underway at the Federal Energy Regulatory Commission (“FERC”) regarding market operations, reliability and resilience and state/federal jurisdiction. Notwithstanding the volume of comments, it will be interesting to see whether FERC will adopt the DOE’s proposal in full, as proposed, or within the time frame suggested by DOE. It is possible FERC may institute additional proceedings to further investigate issues regarding fuel security and grid resilience.”
In a development that demonstrates the potential impact of DOE’s action, a group of former FERC Commissioners – including former Chairs Moler, Hoecker, Wood, and Wellinghoff, and former Commissioners Santa, Breathitt, Brownell, and Kelliher – submitted comments challenging several of the NOPR’s proposals. The former Commissioners state that the NOPR “would be a significant step backward from the Commission’s long and bipartisan evolution to transparent, open, competitive wholesale markets.” The former Commissioners note that the NOPR proposes to subsidize certain resources, which will “drive out the unsubsidized resource” and “inevitably raise prices to customers.” They go on to say that FERC has always been “fuel-agnostic.” They also agree that the markets can be improved and encourage FERC to respond to the DOE NOPR by identifying those aspects of the markets that should be improved and institute additional proceedings to examine those concerns on a national or regional basis. Finally, the former Commissioners note that few electrical system outages are related to generation; most are related to problems in the transmission or distribution sectors, and that certain RTOs have recently adopted proposals to enhance generator performance.