By Robert P. Simons

February 2, 2019 - The threat to power grid resilience and reliability due to the continued retirement of coal-fired power plants has generated calls for immediate action. A severe weather event such as the “bomb cyclone” or “polar vortex” may stretch power capacity to the limits at any time.

Low-carbon technologies that increase efficiency and reduce carbon emissions are available to modify existing coal plants or incorporate into new facilities. The use of these technologies helps to address environmental concerns.

However, time and startup costs are the clear obstacles for would-be projects to access public and private resources. In some cases, the Department of Energy (DOE) secretary has discretionary authority that may be used more aggressively to expedite or otherwise modify the approval process of existing programs, which could fund projects to preserve existing coal-fired facilities and serve as a bridge to power plants of the future.

Options Include Federal Power Act

As an example of the urgency of the issue, FirstEnergy Corp. asked DOE Secretary Rick Perry to declare a power-grid emergency to trigger payments to FirstEnergy. Perry has met with members of Congress to gain support for the potential use of section 202(c) powers under the Federal Power Act, or alternatively to identify “any other options that are out there that are reasonable.”

Perry made clear his opinion that “the time for study is over.” As an alternative or in addition to invoking section 202(c) powers, Perry has the discretion to expedite or otherwise modify the approval process of existing DOE programs to support the preservation of coal-fired power plants.

Potential applicants for DOE programs, though, need time and money. The Title XVII Innovative Energy Loan Guarantee Program provides loan guarantees to accelerate the deployment of innovative clean energy technology. But the non-refundable application cost alone may be up to $400,000, and the application process takes upward of two years. These time and cost estimates do not include the expense and time outlays for preparing the application, which given the breadth and depth of the application requirements themselves are extensive. As a result, $8.5 billion of public money earmarked for fossil fuel projects remains untouched.

There are potential avenues for navigating these obstacles. Specifically, the regulations for the loan guarantee program provide a mechanism for deviating from the application requirements where the requirements are not “specified by the [Energy Policy Act of 2005] or other applicable statutes.” Such requests are determined by the secretary “in his discretion.” Accordingly, aspects of the application process that are not explicitly required under the statutory scheme may be avoided by requesting a deviation or deviations.