The U.S. Department of Energy released the following press release on September 29:

U.S. Secretary of Energy Rick Perry formally proposed that the Federal Energy Regulatory Commission (FERC) take swift action to address threats to U.S. electrical grid resiliency.  Pursuant to his authority under Section 403 of the Department of Energy Organization Act, the Secretary urged the Commission to issue a final rule requiring its organized markets to develop and implement reforms that would fully price generation resources necessary to maintain the reliability and resiliency of our nation’s grid.

“A reliable and resilient electrical grid is critical not only to our national and economic security, but also to the everyday lives of American families,” said Secretary Perry. “A diverse mix of power generation resources, including those with on-site reserves, is essential to the reliable delivery of electricity—particularly in times of supply stress such as recent natural disasters. My proposal will strengthen American energy security by ensuring adequate reserve resource supply and I look forward to the Commission acting swiftly on it.”

If adopted by FERC, Secretary Perry’s common sense market reforms proposal will:

• Ensure the diversity and reliability of generation supply.
• Boost the resilience of our grid against outages.
• Maximize reserve resource capacity for times of unusually high demand, including severe weather events.

The Secretary of Energy is primarily responsible for ensuring the electrical grid meets America’s needs now and into the future and FERC is charged with regulating the markets to achieve that mission. The recent Staff Report to the Secretary on Electricity Markets and Reliability showed that while today’s grid is reliable, market distortions are threatening its resilience and the future of American energy security. The Commission needs to act swiftly to ensure that the resiliency attributes of electrical generation from facilities with on-site fuel supplies are fully valued.

The full text of the Secretary’s Letter to the Commission as well as the Proposed Rule are both available at DOE’s website, www.energy.gov.

Akron, Ohio-based investor-owned utility FirstEnergy commended the move:

“We commend Secretary Perry and the Department of Energy for recognizing the importance of a reliable, resilient electric grid for American families and our nation’s economy,” FirstEnergy president and CEO Charles E. Jones said in a statement. “Correcting the faulty market conditions and keeping essential baseload generating plants operating will help ensure customers continue to receive safe, reliable and affordable supplies of electricity while maintaining the security of the electricity grid. We look forward to final action by the Federal Energy Regulatory Commission (FERC) as soon as possible.”

Both SEIA and the Natural Resources Defense Council came out against the proposed rule:

“Solar is an affordable, reliable, nearly limitless source of fuel,” said Christopher Mansour, SEIA’s vice president of federal affairs. “While we agree that wholesale markets should fully compensate generators for all the energy, capacity and ancillary services they provide, healthy competition should always promote the best, most innovative solutions. It’s time to embrace 21st century technologies, like solar, and all the advantages they offer to our nation’s grid.”

“Rick Perry is trying to slam through an outrageous bailout of the coal and nuclear industries on the backs of American consumers,” said Kit Kennedy, director of NRDC’s Energy & Transportation Program, in a statement. “This radical proposal would lead to higher energy bills for consumers and businesses, as well as dirtier air and increased health problems. DOE’s proposal is unprecedented, and ignores the findings of its own report on electricity markets and grid reliability, which did not demonstrate any need to bail out these large uneconomic power plants.”

FERC must act on the proposed rule within 60 days, or alternatively issue the rule as an interim final rule immediately with provision for later modifications after consideration of public comments, according to Perry’s Notice of Proposed Rulemaking.