By Jessica Holdman
January 9, 2018 - The hopes of North Dakota’s coal industry were dashed Monday afternoon when the Federal Energy Regulatory Commission unanimously rejected a proposal that would have propped up the state’s main power source.
The U.S. Department of Energy proposal, issued last fall, would have compensated power plants for keeping coal on hand.
“We are disappointed in yesterday's determination by the Federal Energy Regulatory Commission,” Lignite Energy Council President Jason Bohrer said in a statement Tuesday. “Currently, regional electricity markets do not properly compensate generators who produce ‘always on’ power or whose power is not susceptible to weather disruptions.”
Energy Secretary Rick Perry suggested that FERC adopt a rule that pays baseload power plants for having 90 days’ worth of fuel on-site, a standard that only coal and nuclear could meet.
The impetus came from a DOE grid reliability study calling for resiliency in the nation’s power supply. Resiliency was defined by Perry as power sources' ability to bounce back from natural or man-made disasters that disrupt fuel supply. The DOE said resiliency is threatened by plant closures, which have been increasing in recent years due to competition from cheap natural gas and regulations.
But opponents of the proposal questioned how much on-site fuel really improves a source’s reliability.
According to the Federal Power Act, before tariff changes can be implemented there must be a showing that existing tariffs are "unjust, unreasonable, unduly discriminatory or preferential." The FERC maintained that supporters of the proposal failed to meet that standard.
Though the proposal was not adopted, FERC did formally ask electric grid operators to show what they are doing to ensure that their grids remain resilient, a move supported by Perry. That information may be used for a future proposal.
“It remains our hope that FERC will ultimately level the playing field when it comes to dispatching energy sources with the long-term goal focused on a resilient grid to serve our homes, businesses and the national economy,” Bohrer said.