Grid Resiliency Pricing Rule, 46940-46948 [2017-21396]
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Federal Register / Vol. 82, No. 194 / Tuesday, October 10, 2017 / Proposed Rules
(1) Is not a ‘‘significant regulatory
action’’ under Executive Order 12866,
(2) Is not a ‘‘significant rule’’ under
the DOT Regulatory Policies and
Procedures (44 FR 11034, February 26,
1979),
(3) Will not affect intrastate aviation
in Alaska, and
(4) Will not have a significant
economic impact, positive or negative,
on a substantial number of small entities
under the criteria of the Regulatory
Flexibility Act.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation
safety, Incorporation by reference,
Safety.
The Proposed Amendment
Accordingly, under the authority
delegated to me by the Administrator,
the FAA proposes to amend 14 CFR part
39 as follows:
PART 39—AIRWORTHINESS
DIRECTIVES
1. The authority citation for part 39
continues to read as follows:
■
Authority: 49 U.S.C. 106(g), 40113, 44701.
§ 39.13
[Amended]
2. The FAA amends § 39.13 by
removing Amendment 39–18885 (82 FR
24239, May 26, 2017), and adding the
following new AD:
■
Stemme AG: Docket No. FAA–2017–0952;
Product Identifier 2017–CE–028–AD.
(a) Comments Due Date
We must receive comments by November
24, 2017.
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(b) Affected ADs
This AD replaces AD 2017–10–11,
Amendment 39–18885 (82 FR 24239, May 26,
2017) (‘‘AD 2017–10–11’’).
(c) Applicability
This AD applies to Stemme AG Model
Stemme S10–VT gliders (type certificate
previously held by Stemme GmbH & Co. KG),
all serial numbers, and Stemme AG Model
Stemme S 12 gliders, all serial numbers, that
are:
(1) Equipped with a front gearbox, part
number (P/N) 11AG, with a serial number
listed in table 1 to paragraph (c) of this AD;
and
(2) are certificated in any category.
Table 1 to paragraph (c) of this AD—
Affected P/N 11AG (front gearbox) S/Ns
80058/0814, 80059/0915, 80060/0915, 80061/
1115, 80062/1215, 80063/0116, 80064/0416,
80065/0616, 80066/0716, 80067/0916, 80068/
1016, 80069/0117, 80070/0217, 80071/0217.
Note 1 to paragraph (c) of this AD: Page 2
of Stemme AG Service Bulletin No. P062–
980010, dated April 21, 2017, provides a
pictorial of where the serial number of the
affected gearboxes are located.
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(d) Subject
Air Transport Association of America
(ATA) Code 61: Propellers/Propulsors.
(e) Reason
This AD was prompted by mandatory
continuing airworthiness information (MCAI)
issued by the aviation authority of another
country to identify and correct an unsafe
condition on an aviation product. The MCAI
describes the unsafe condition as certain
propeller front transmission gear wheels
having insufficient material strength because
of improper heat treatment during
manufacturing. We are issuing this proposed
AD to add Stemme AG Model Stemme S 12
to the applicability, paragraph (c), of this AD,
and to prevent failure of the propeller front
transmission gear wheels. This failure could
cause loss of power between the engine and
the propeller, which could result in reduced
control.
(f) Actions and Compliance
Unless already done, do the following
actions:
(1) For Model Stemme S10–VT gliders:
Before further flight after June 15, 2017 (the
effective date of AD 2017–10–11), replace the
front gearbox following STEMME Procedural
Specification Dok. Nr.: P320–900060, dated
June 14, 2017, as specified in STEMME
Service Bulletin Dok. Nr.: P062–980010,
Issue: 01, dated June 14, 2017.
(2) For Model Stemme S 12 gliders: Before
further flight after the effective date of this
AD, replace the front gearbox following
STEMME Procedural Specification Dok. Nr.:
P320–900060, dated June 14, 2017, as
specified in STEMME Service Bulletin Dok.
Nr.: P062–980010, Issue: 01, dated June 14,
2017.
(3) As of the effective date of this AD, do
not install a front gear box listed in table 1
of paragraph (c) of this AD.
(4) The service information for this AD
allows the owner/operator to do certain
maintenance tasks. Also, the service
information specifies certain maintenance
tasks be done by Stemme AG. However, for
this AD, we do not allow the owner/operator
to do any maintenance tasks; all maintenance
tasks must be done by an appropriately
certifiedmechanic or maintenance shop. In
addition, we do not require any maintenance
tasks be done specifically by Stemme AG;
any appropriately certified mechanic or
maintenance shop may do the tasks required
by this AD.
(g) Other FAA AD Provisions
The following provisions also apply to this
AD:
(1) Alternative Methods of Compliance
(AMOCs): The Manager, Small Airplane
Standards Branch, FAA, has the authority to
approve AMOCs for this AD, if requested
using the procedures found in 14 CFR 39.19.
Send information to ATTN: Jim Rutherford,
Aerospace Engineer, FAA, Small Airplane
Standards Branch, 901 Locust, Room 301,
Kansas City, Missouri 64106; telephone:
(816) 329–4165; fax: (816) 329–4090; email:
jim.rutherford@faa.gov.
(i) Before using any approved AMOC on
any airplane to which the AMOC applies,
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notify your appropriate principal inspector
(PI) in the FAA Flight Standards District
Office (FSDO), or lacking a PI, your local
FSDO.
(ii) AMOCs approved for AD 2017–10–11,
Amendment 39–18885 (82 FR 24239, May 26,
2017) are approved as AMOCs for the
corresponding provisions of this AD.
(2) Contacting the Manufacturer: For any
requirement in this AD to obtain corrective
actions from a manufacturer, the action must
be accomplished using a method approved
by the Manager, Small Airplane Standards
Branch, FAA; or the European Aviation
Safety Agency (EASA).
(h) Related Information
(1) Refer to MCAI European Aviation
Safety Agency (EASA) AD No. 2017–0072–E,
dated April 26, 2017, and Stemme AG
Service Bulletin No. P062–980010, dated
April 21, 2017, for related information. You
may examine the MCAI on the Internet at
https://www.regulations.gov by searching for
and locating Docket No. FAA–2017–0952.
For service information related to this AD,
contact STEMME AG, Flugplatzstrasse F2,
Nr. 6–7, D–15344 Strausberg, Germany;
telephone: +49 (0) 3341 3612–0, fax: +49 (0)
3341 3612–30; Internet: https://
www.stemme.com. You may review copies of
the referenced service information at the
FAA, Policy and Innovation Division, 901
Locust, Kansas City, Missouri 64106. For
information on the availability of this
material at the FAA, call (816) 329–4148.
Issued in Kansas City, Missouri, on
September 26, 2017.
Pat Mullen,
Acting Deputy Director, Policy & Innovation
Division, Aircraft Certification Service.
[FR Doc. 2017–21226 Filed 10–6–17; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 35
[Docket No. RM18–1–000]
Grid Resiliency Pricing Rule
Federal Energy Regulatory
Commission, Department of Energy.
ACTION: Notice of proposed rulemaking.
AGENCY:
Pursuant to the Department of
Energy Organization Act (DOE Act), the
Secretary of Energy (Secretary) is
proposing a rule for final action by the
Federal Energy Regulatory Commission
(Commission or FERC). The Secretary is
proposing the Commission exercise its
authority under the Federal Power Act
(FPA) to establish just and reasonable
rates for wholesale electricity sales.
Under the proposal, the Commission
will impose rules on Commissionapproved independent system operators
SUMMARY:
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(ISOs) and regional transmission
organizations (RTOs) to ensure that
certain reliability and resilience
attributes of electric generation
resources are fully valued. The
Secretary is directing the Commission to
take final action on this proposal within
60 days of publication of this proposed
rule in the Federal Register or, in the
alternative, to issue the rule as an
interim final rule immediately, with
provision for later modifications after
consideration of public comments. The
Secretary further directs that any final
rule adopting this proposal take effect
within 30 days of publication of such
final rule in the Federal Register and
proposes that each ISO and RTO subject
to the rule shall submit a compliance
filing within 15 days of the effective
date of such final rule.
DATES: The Commission is directed
either to take final action by December
11, 2017 or to issue the proposed rule
as an interim final rule. Public comment
is due either November 24, 2017 or
according to a schedule to be published
by the Commission.
ADDRESSES: Comments, identified by
docket number, may be filed in the
following ways:
• Email: Electronic Filing through
https://www.ferc.gov. Documents created
electronically using word processing
software should be filed in native
applications or print-to-PDF format and
not in a scanned format.
• Mail/Hand Delivery: Those unable
to file electronically may mail or handdeliver comments to: Federal Energy
Regulatory Commission, Secretary of the
Commission, 888 First Street NE.,
Washington, DC 20426.
Instructions: For detailed instructions
on submitting comments and additional
information on the rulemaking process,
see the Comment Procedures Section of
this document.
FOR FURTHER INFORMATION CONTACT:
Ronald (R.J.) Colwell, U.S. Department
of Energy, Office of the Assistant
General Counsel for Electricity and
Fossil Energy (GC–76), Forrestal
Building, Room 6D–033, 1000
Independence Avenue SW.,
Washington, DC 20585; (202) 586–9507;
email ronald.colwell@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Statutory Background
II. Discussion of Proposed Rule
A. Affordable, Reliable and Resilient
Electricity Is Vital to the Economic and
National Security of the United States
and Its People
B. There Have Been Significant
Retirements of Fuel-Secure Generation
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C. The 2014 Polar Vortex Exposed
Problems With the Resiliency of the
Electric Grid
D. Regulated Wholesale Power Markets Are
Not Adequately Pricing Resiliency
Attributes of Fuel-Secure Power
E. The Preservation of Generation Diversity
Will Benefit Consumers
F. NERC Warns That Premature
Retirements of Fuel-Secure Generation
Threaten the Reliability and Resiliency
of the Bulk Power System
G. The DOE Staff Report Made Clear the
Challenges to the Grid and That
Resiliency Must Be Addressed
H. Congress Is Concerned About the
Potential Loss of Valuable Generation
Resources
I. The FERC Is Cognizant of the Problem
and Has the Necessary Information on
Which To Act Expeditiously
III. Proposal
IV. Procedures for Completion of Final
Action
A. Deadlines
B. Comment Procedures
C. Compliance Filings
V. Statutory and Regulatory Review
VI. Information Collection Statement
VII. Environmental Analysis
VIII. Regulatory Flexibility Act
IX. Executive Order 12866
X. Document Availability
XI. Approval of the Office of the Secretary
I. Statutory Background
Section 403 of the DOE Act authorizes
the Secretary of Energy to propose rules
for Commission action regarding certain
Commission functions, including its
electricity rate-related functions under
sections 205 and 206 of the Federal
Power Act, and to set reasonable time
limits for Commission completion of the
proposed action. Section 403(a)
provides for the initiation of rulemaking
proceedings by either the Secretary or
the Commission. In the exercise of this
authority, the Commission proposes
rules by publishing Notices of Proposed
Rulemaking (NOPR) in the Federal
Register. The Secretary has likewise
exercised his section 403 authority by
publishing NOPRs in the Federal
Register. This authority was first
exercised by the Secretary in 1979 by
publication of a NOPR (‘‘Transportation
Certificates for Natural Gas,’’ 44 FR
17644, March 22, 1979). The Secretary
has subsequently acted under section
403 on several occasions by publication
of a NOPR in the Federal Register. By
proposing a rule in this manner, the
Secretary enables the Commission to
proceed directly to the consideration of,
and final action on, the proposal and
eliminates the need for the Commission
to order or publish its own separate
rulemaking proposal.
Independent of the Secretary’s action
under section 403(a), FERC has full
authority to establish the rule set forth
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in this proposed rule. Specifically,
FERC has authority to establish just and
reasonable rates, terms, and conditions
for wholesale electricity sales under
sections 205 and 206 of the Federal
Power Act, and FERC has discretion to
do so by means of a rulemaking
pursuant to section 403(c), which
authorizes FERC to use rulemaking
procedures to conduct its Federal Power
Act functions relating to rates and
charges. Transmission Access Policy
Study Group v. F.E.R.C., 225 F.3d 667,
688 (D.C. Cir. 2000), aff’d 535 U.S. 1
(2002). FERC has on numerous
occasions imposed market rules on ISOs
and RTOs. See 18 CFR part 35.
Furthermore, section 403(b) requires
that FERC ‘‘shall consider and take final
action on any proposal made by the
Secretary [under subsection (a)] in an
expeditious manner in accordance with
such reasonable time limits as may be
set by the Secretary for the completion
of action by the Commission on any
such proposal.’’ The Secretary is
therefore authorized to direct the
Commission to consider and take final
action within the reasonable time limits
the Secretary establishes in this
proposed rule. Given the extensive
record the Commission has already
developed on the subject matter of this
proposed rule, the time limit for final
action provided herein allows adequate
time for the Commission to receive and
consider public comments.
II. Discussion of the Proposed Rule
The resiliency of the nation’s electric
grid is threatened by the premature
retirements of power plants that can
withstand major fuel supply disruptions
caused by natural or man-made
disasters and, in those critical times,
continue to provide electric energy,
capacity, and essential grid reliability
services. These fuel-secure resources are
indispensable for the reliability and
resiliency of our electric grid—and
therefore indispensable for our
economic and national security. It is
time for the Commission to issue rules
to protect the American people from
energy outages expected to result from
the loss of this fuel-secure generation
capacity.
A. Affordable, Reliable and Resilient
Electricity Is Vital to the Economic and
National Security of the United States
and Its People
Ensuring that American families and
businesses have access to reliable,
resilient and affordable electricity is
vital to the economy, national security,
and quality of life. From heating homes
in the winter to cooling them in the
summer, providing lighted streets so
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people can walk safely at night,
powering machines and technology that
create jobs, and connecting us through
smart phones and the internet—
electricity is a key driver of America’s
economic prosperity and the basic
necessities of life. The American
economy, government and national
defense all depend on electricity.
Therefore, ensuring a reliable and
resilient electric supply and
corresponding supply chain are also
vital to national security.
The sheer size and impact of the
electricity market on our economy
cannot be overstated. According to the
Department of Energy’s January 2017
Quadrennial Energy Review (January
2017 QER): In the United States, there
are around 7,700 operating power plants
that generate electricity from a variety of
primary energy sources; 707,000 miles
of high-voltage transmission lines; more
than 1 million rooftop solar
installations; 55,800 substations; 6.5
million miles of local distribution lines;
and 3,354 distribution utilities
delivering electricity to 148.6 million
customers. The total amount of money
paid by end users for electricity in 2015
was about $400 billion. This drives an
$18.6 trillion U.S. gross domestic
product and significantly influences
global economic activity totaling
roughly $80 trillion.1
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B. There Have Been Significant
Retirements of Fuel-Secure Generation
Market changes are resulting in a
significant loss of fuel-secure
generation. According to the January
2017 QER: Currently, the changing
electricity sector is causing the closure
of many coal and nuclear plants in a
shift from recent trends. From 2000
through 2009, power plant retirements
were dominated by natural gas steam
turbines. Over the past 6 years (2010–
2015), power plant retirements were
dominated by coal plants (37 GW),
which accounted for over 52 percent of
recently retired power plant capacity.
Over the next 5 years (between 2016 and
2020), 34.4 GW of summer capacity is
planned to be retired, and 79 percent of
this planned retirement capacity are
coal and natural gas plants (49 percent
and 30 percent, respectively). The next
largest set of planned retirements are
nuclear plants (15 percent).2
The ‘‘Staff Report to the Secretary on
Electricity Markets and Reliability’’
1 Transforming
the Nation’s Electricity System:
The Second Installment of the Quadrennial Energy
Review, January 6, 2017 (January 2017 QER).
2 January 2017 QER at 3–73.
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(‘‘DOE Staff Report’’) 3 also discusses the
large number of fuel-secure plants that
have retired or are scheduled to retire:
• Between 2002 and 2016, 531 coal
generating units representing
approximately 59,000 MW of generation
capacity retired from the U.S. generation
fleet.4
• EIA reported that coal-fired power
plants made up more than 80 percent of
the 18,000 MW of electric generating
capacity that retired in 2015.5
• It is anticipated that approximately
12,700 MW of coal generation will retire
through 2020.6
• Between 2002 and 2016, 4,666 MW
of nuclear generating capacity was
announced for retirement, or
approximately 4.7 percent of the U.S.
total.7
• Eight reactors representing 7,167
MW of nuclear capacity (7.2 percent of
U.S. nuclear capacity and 0.6 percent of
total U.S. generating capacity) have
announced retirement plans since 2016.
This does not include seven reactors
that averted early retirement through
state action.8
C. The 2014 Polar Vortex Exposed
Problems With the Resiliency of the
Electric Grid
In early 2014, the Polar Vortex (a band
of very cold weather spread across
much of the eastern and central United
States) created record-high winter peak
electric demand for heating and equally
high demand for natural gas for
residential heating. During the Polar
Vortex, PJM Interconnection (PJM) 9
struggled to meet demand for electricity
because a significant amount of
generation was not available to run.
According to the DOE Staff Report, the
loss of generation capacity could have
been catastrophic, but a number of fuelsecure plants that were scheduled for
retirement were called upon to meet the
need for electricity: American Electric
Power reported that it deployed 89
3 U.S. Department of Energy, Staff Report to the
Secretary on Electricity Markets and Reliability,
August 2017 (DOE Staff Report).
4 DOE Staff Report at 22.
5 DOE Staff Report at 22, citing U.S. Energy
Information Administration, Today in Energy,
March 8, 2016. More recent EIA data shows an
overall larger amount of 2015 generation capacity
retirements (25,400 MW), of which coal-fired power
plants made up 72%. EIA Monthly Update to the
Annual Electric Generator Report, Form EIA–860m,
March 2017.
6 U.S. Energy Information Administration (EIA),
Monthly Update to the Annual Electric Generator
Report, Form EIA–860m, June 2017, https://
www.eia.gov/electricity/data/eia860m/.
7 DOE Staff Report at 29.
8 DOE Staff Report at 30.
9 PJM Interconnection is the regional transmission
organization (‘‘RTO’’) serving thirteen states and the
District of Columbia.
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percent of its coal units scheduled for
retirement in 2014 to meet demand
during the Polar Vortex, and Southern
Company reported using 75 percent of
its coal units scheduled for closure.
Using these retiring units enabled
utilities to meet customer demand
during a period when already limited
natural gas resources were diverted from
electricity production to meet
residential heating needs. Once retired,
however, these units will not be
available for the next unseasonably cold
winter.10
Likewise, the DOE Staff Report notes
that, overall, nuclear generators
performed extremely well during the
Polar Vortex, with an average capacity
factor of 95 percent.11
Sixty-five million people within the
PJM footprint could have been affected
if these units were not available. The
2014 Polar Vortex was a warning that
the current and scheduled retirements
of fuel-secure plants could threaten the
reliability and resiliency of the electric
grid.12
D. Regulated Wholesale Power Markets
Are Not Adequately Pricing Resiliency
Attributes of Fuel-Secure Power
There is a growing recognition that
organized markets do not necessarily
pay generators for all the attributes that
they provide to the grid, including
resiliency. Because wholesale pricing in
those markets does not adequately
consider or accurately value those
benefits, fuel-secure generation
resources are often not compensated for
those benefits.
The January 2017 QER summarizes
the problem of how regulated wholesale
markets are not adequately pricing
resiliency attributes of fuel-secure
generation: Reliability investments are
typically incorporated into ratemaking
processes for all electric utilities.
Supplementary investments for recovery
from outage events also are handled
through established ratemaking
processes. Resilience requirements tend
to be valued as contributions to
reliability and incorporated as part of
ratemaking processes. These processes
are more easily executed in structures
that are traditional end-to-end,
vertically integrated electricity delivery
services; other market structures
complicate reliability and resilience
investment decision-making. Short-run
markets may not provide adequate price
signals to ensure long-term investments
10 DOE Staff Report, at 98 (internal citations
omitted).
11 DOE Staff Report, at 95 (internal citations
omitted).
12 DOE Staff Report, at 98–99, 118.
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in appropriately configured capacity.
Also, resource valuations tend not to
incorporate superordinate network and/
or social values such as enhancing
resilience into resource or . . .
investment decision making. The
increased importance of system
resilience to overall grid reliability may
require adjustments to market
mechanisms that enable better
valuation.13
A recent study by IHS Markit
amplifies the same point: ‘‘the
increasing cost of ensuring power
system resilience is exposing the
problem that some current wholesale
market price formation rules do not
fully compensate generating resources
for providing the desired power system
supply resiliency.’’ 14
E. The Preservation of Generation
Diversity Will Benefit Consumers
The IHS Markit study also concludes
that preservation of generation diversity
provided by fuel-secure resources
benefits consumers: ‘‘The current
diversified US electric supply portfolio
lowers the cost of electricity production
by about $114 billion per year and
lowers the average retail price of
electricity by 27%’’ compared with a
‘‘less efficient diversity case’’ involving
‘‘no meaningful contributions from coal
or nuclear resources.’’ 15
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F. NERC Warns That Premature
Retirements of Fuel-Secure Generation
Threaten the Reliability and Resiliency
of the Bulk Power System
The North American Electric
Reliability Corporation (NERC) (the
FERC-designated Electric Reliability
Organization), whose mission is to
assure the reliability and security of the
bulk power system in North America,
states: The North American electric
power system is undergoing a rapid and
significant transformation with ongoing
retirements of fossil-fired and nuclear
capacity, as well as growth in natural
gas, wind, and solar resources. This
shift is caused by several drivers, such
as federal, state, and provincial policies,
low natural gas prices, electricity market
forces, and integration of both
distributed and utility-scale renewable
resources. The changing resource mix is
altering the operating characteristics of
the bulk power system (BPS). These
changing characteristics must be well
understood and properly managed in
13 January
2017 QER, at 4–41 (emphasis added).
Markit, ‘‘Ensuring Resilient and Efficient
Electricity Generation: The Value of the current
diverse US power supply portfolio’’ at 8.
15 Id. at 4–5.
14 IHS
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order to assure continued reliability and
ensure resiliency.16
Specifically, according to NERC,
‘‘Coal-fired and nuclear generation have
the added benefits of high availability
rate, low forced outages, and secured
on-site fuel. Many months of on-site fuel
allow these units to be operated in a
manner independent of supply chain
disruptions.’’ 17
As a consequence, NERC warns,
‘‘Premature retirements of fuel secure
baseload generating stations reduces
resilience to fuel supply disruptions.’’ 18
G. The DOE Staff Report Made Clear the
Challenges to the Grid and That
Resiliency Must Be Addressed
The DOE Staff Report confirms these
observations and exposes the potential
challenges and threats to the reliability
and resiliency of the electric grid, as
well as the economic hardship faced by
some of the most resilient types of
generation. Among other things, the
DOE Staff Report warns that premature
retirements of fuel-secure resources
impose serious risks: Ultimately, the
continued closure of traditional
baseload power plants calls for a
comprehensive strategy for long-term
reliability and resilience. States and
regions are accepting increased risks
that could affect the future reliability
and resilience of electricity delivery for
consumers in their regions.
Hydropower, nuclear, coal, and natural
gas power plants provide ERS
[(‘‘essential reliability services’’)] and
fuel assurance critical to system
resilience. A continual comprehensive
regional and national review is needed
to determine how a portfolio of
domestic energy resources can be
developed to ensure grid reliability and
resilience.19
The DOE Staff Report also recognizes
that ‘‘system fuel supply chain
disruptions can impact many generators
during a single widespread fuel shortage
event,’’ and that ‘‘[n]uclear and coal
plants typically have advantages
associated with onsite fuel storage[.]’’ 20
In light of these facts, the DOE Staff
16 NERC Letter to Secretary of Energy Rick Perry,
May 9, 2017, Attachment ‘‘Synopsis of NERC
Reliability Assessments’’ (Synopsis) at 1.
17 NERC, Synopsis at 2.
18 NERC, Synopsis at 3.
19 ‘‘Staff Report to the Secretary on Electricity
Markets and Reliability,’’ U.S. Department of
Energy, August 2017 at 14 (emphasis added).
20 DOE Staff Report, at 91. For example, ‘‘coal
plants . . . maintain onsite coal stockpiles to
accommodate both normal variance in deliveries
and the possibility of a major supply disruption.
Coal stockpiles have recently been slightly smaller
than historical averages, while days of burn have
increased slightly relative to historic averages from
the 70–80 range to the 85–100-day range.’’ Id., at
95.
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Report calls for prompt action: Markets
need further study and reform to
address future services essential to grid
reliability and resilience. System
operators are working toward
recognizing, defining, and compensating
for resource attributes that enhance
reliability and resilience (on both the
supply and demand side). However,
further efforts should reflect the urgent
need for clear definitions of reliabilityand resilience-enhancing attributes and
should quickly establish the market
means to value or the regulatory means
to provide them.21
The DOE Staff Report’s first
recommendation for protecting the
resiliency of the electric grid is to
correct distortions in price formation in
the organized markets: FERC should
expedite its efforts with states, RTO/
ISOs, and other stakeholders to improve
energy price formation in centrallyorganized wholesale electricity markets.
After several years of fact finding and
technical conferences, the record now
supports energy price formation reform,
such as the proposals laid out by PJM
and others.22
H. Congress Is Concerned About the
Potential Loss of Valuable Generation
Resources
In July 2015, the chairmen of the
Senate Committee on Energy and
Natural Resources, the House
Committee on Energy and Commerce,
and the House Subcommittee on Energy
and Power, sent correspondence to the
Commission about challenges in the
Commission-approved organized
electricity markets.23 The chairmen
expressed their concern that ‘‘[v]aluable
baseload power plants in these markets,
including reliable nuclear and coal[fired] plants, are facing premature
retirement.’’ 24
More specifically, the Chairmen’s
letter stated: ‘‘There are growing
indications that owners and operators of
major baseload power plants are facing
imminent decisions regarding their
continued economic viability’’ 25 and
‘‘broad scale premature retirements of
otherwise performing baseload units
because of market rules—rather than
market forces—would represent failure
of regulation.’’ 26 The letter made clear
that electricity market prices for energy
and capacity should reflect the ‘‘true
marginal cost of supply, promote
21 Id.,
at 10 (emphasis added).
at 126 (internal citations omitted).
23 Letter from Fred Upton, Lisa Murkowski, and
Ed Whitfield, U.S. Congress, to Norman Bay,
Chairman, FERC (July 8, 2015).
24 Id.
25 Id.
26 Id.
22 Id.,
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necessary investment, and produce
meaningful price signals that clearly
indicate where new supply and
investment are needed.27
I. The FERC Is Cognizant of the Problem
and Has the Necessary Information on
Which To Act Expeditiously
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Over the past several years, the
Commission has developed an extensive
record on price formation in the
Commission-approved ISOs and RTOs.
The Commission has recognized that
there are deficiencies in the way the
regulated wholesale power markets
price power (i.e., energy, capacity, and
ancillary services) and that these
deficiencies are undermining reliability
and resiliency.
Beginning in June 2013, the
Commission recognized the changing
mix of generation resources, determined
that existing capacity markets were not
providing a sufficiently reliable supply
of electricity, predicted the loss of fuelsecure generation, and sought input
from the public through proceedings on
price formation in the organized
markets. In a 2013 technical conference,
FERC explained: The purpose of the
technical conference is to consider how
current centralized capacity market
rules and structures are supporting the
procurement and retention of resources
necessary to meet future reliability and
operational needs. Since their
establishment, centralized capacity
markets have continued to evolve.
Meanwhile, the mix of resources is also
evolving in response to changing market
conditions, including low natural gas
prices, state and federal policies
encouraging the entry of renewable
resources and other specific
technologies, and the retirement of
aging generation resources. This
changing resource mix may result in
future reliability and operational needs
that are different than those of the
past.28
In December 2014, PJM requested that
the Commission issue an order
approving PJM’s revisions to its capacity
market rules to require resources
participating in the capacity market to
honor contractual commitments to
deliver electricity at any time of the
year.29 The Commission determined
that the existing capacity market was
27 Id.
28 FERC, Centralized Capacity Markets in
Regional Transmission Organizations and
Independent System Operators, Docket No. AD13–
7–000, p. 1.
29 151 FERC ¶ 61,208, PJM Interconnection,
L.L.C., Order on Proposed Tariff Revisions (2015);
rehearing denied, PJM Interconnection, L.L.C.,
Order on Rehearing and Compliance, 155 FERC
¶ 61,157 (2016).
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not providing a sufficiently reliable
supply of electricity and, to remedy this
urgent shortfall, accepted PJM’s
proposed market rule changes. FERC’s
order was recently upheld by the D.C.
Circuit in Advanced Energy
Management Alliance v. FERC, D.C. Cir.
(June 30, 2017).
A year after its initial 2013
proceeding, the Commission initiated a
proceeding in June 2014, entitled ‘‘Price
Formation in Energy and Ancillary
Services Markets in Regional
Transmission Organizations and
Independent System Operators’’ (Price
Formation Proceeding) to evaluate
issues regarding price formation in the
energy and ancillary services markets
operated by RTOs and ISOs.30 In a
December 2014 staff analysis for this
proceeding, the FERC Staff observes that
‘‘[a]ll RTOs and ISOs have identified a
class of reliability and operational
issues that are incorporated into the
day-ahead and real-time market
processes but which are not reflected in
day-ahead and real-time energy and
ancillary services prices.’’ 31
The Price Formation Proceeding
resulted in a number of additional
proceedings and rulemakings, some of
which are described below:
• In November 2016, under Order No.
825, Settlement Intervals and Shortage
Pricing in Markets Operated by Regional
Transmission Organizations and
Independent System Operators, the
Commission directed reforms to
settlement intervals and shortage
pricing to more accurately compensate
resources based on the value they
provide the system.32
• In November 2016, pursuant to a
NOPR entitled Essential Reliability
Services and the Evolving Bulk-Power
System—Primary Frequency Response,
the Commission proposed a rule to
require all newly interconnecting large
and small generating facilities, both
synchronous and non-synchronous, to
install and enable primary frequency
response capability as a condition of
interconnection.33
30 Price Formation in Energy and Ancillary
Services Markets in Regional Transmission
Organizations and Independent System Operators,
Docket No. AD14–14–000, June 2014.
31 Staff Analysis of Operator-Initiated
Commitments in RTO and ISO Markets, Price
Formation in Organized Wholesale Electricity
Markets, [Docket No. AD14–14–000], December
2014 at 5.
32 155 FERC ¶ 61,276; 18 CFR part 35 [Docket No.
RM15–24–000, Order No. 825] Settlement Intervals
and Shortage Pricing in Markets Operated by
Regional Transmission Organizations and
Independent System Operators (Issued June 16,
2016).
33 157 FERC ¶ 61,122, Essential Reliability
Services and the Evolving Bulk-Power System—
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• In December 2016, under Order
831, Offer Caps in Markets Operated by
Regional Transmission Organizations
and Independent System Operators, the
Commission raised existing caps on
energy market offers and allowed those
higher-price offers to set market clearing
prices.34
• In December 2016, pursuant to a
NOPR entitled Fast-Start Pricing in
Markets Operated by Regional
Transmission Organizations and
Independent System Operators, the
Commission proposed revising its
regulations to require RTOs and ISOs to
incorporate market rules that properly
price fast-start resources.35 As stated in
the NOPR, the proposed Fast-Start
Pricing ‘‘should lead to prices that more
transparently reflect the marginal cost of
serving load, which will reduce uplift
costs and thereby improve price signals
to support efficient investments.’’ 36
• In January 2017, the Commission
issued a NOPR entitled Uplift Cost
Allocation and Transparency in Markets
Operated by Regional Transmission
Organizations and Independent System
Operators.37 Among other things, this
proposed rule would require that ‘‘each
regional transmission organization
(RTO) and independent system operator
(ISO) that currently allocates the costs of
real-time uplift due to deviations should
allocate such real-time uplift costs only
to those market participants whose
transactions are reasonably expected to
have caused the real-time uplift
costs.’’ 38 This NOPR establishes that the
goals of the price formation in the
proceeding are to:
(1) Maximize market surplus for
consumers and suppliers;
(2) Provide correct incentives for
market participants to follow
commitment and dispatch instructions,
make efficient investments in facilities
and equipment, and maintain reliability;
Primary Frequency Response, Notice of Proposed
Rulemaking (November 17, 2016).
34 157 FERC ¶ 61,115, 18 CFR part 35 [Docket No.
RM16–5–000; Order No. 831] Offer Caps in Markets
Operated by Regional Transmission Organizations
and Independent System Operators (November 17,
2016).
35 157 FERC ¶ 61,213, 18 CFR part 35 [Docket No.
RM18–1–000] Fast-Start Pricing in Markets
Operated by Regional Transmission Organizations
and Independent System Operators (December 15,
2016).
36 157 FERC ¶ 61,213, 18 CFR part 35 [Docket No.
RM18–1–000] Fast-Start Pricing in Markets
Operated by Regional Transmission Organizations
and Independent System Operators (December 15,
2016), at 1.
37 158 FERC ¶ 61,047 Federal Energy Regulatory
Commission, 18 CFR part 35 [Docket No. RM17–2–
000] Uplift Cost Allocation and Transparency in
Markets Operated by Regional Transmission
Organizations and Independent System Operators
(January 19, 2017).
38 Id. at 1.
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(3) Provide transparency so that
market participants understand how
prices reflect the actual marginal cost of
serving load and the operational
constraints of reliably operating the
system; and
(4) Ensure that all suppliers have an
opportunity to recover their costs.39
Through these proceedings, the
Commission has developed an extensive
record on price formation in the
Commission approved ISOs and RTOs.
Nevertheless, the fundamental challenge
of maintaining a resilient electric grid
has not been sufficiently addressed by
the Commission or the ISOs and RTOs.
The continued loss of fuel-secure
generation must be stopped. These
generation resources are necessary to
maintain the resiliency of the electric
grid. FERC must adopt rules requiring
the Commission-approved ISOs and
RTOs to reduce the chronic distortion of
the markets that is threatening the
resilience of the Nation’s electricity
system.
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III. Proposal
In light of these threats to grid
reliability and resilience, it is the
Commission’s immediate responsibility
to take action to ensure that the
reliability and resiliency attributes of
generation with on-site fuel supplies are
fully valued and in particular to
exercise its authority to develop new
market rules that will achieve this
urgent objective.
The recent Polar Vortex, as well as the
devastation from Superstorm Sandy and
Hurricanes Harvey, Irma, and Maria,
reinforces the urgency that the
Commission must act now. Moreover,
the Commission should take action
before the winter heating season begins
so as to prevent the potential failure of
the grid from the loss of fuel-secure
generation—as almost happened during
the 2014 Polar Vortex.
As outlined, the Commission has
developed a vast record of comments,
hearings, and technical conferences on
price formation matters, but has not
done enough to address the crisis at
hand. Immediate action is necessary to
ensure fair compensation in order to
stop the imminent loss of generators
with on-site fuel supplies, and thereby
preserve the benefits of generation
diversity and avoid the severe
consequences that additional shutdowns would have on the electric grid.
39 158
FERC ¶ 61,047 Federal Energy Regulatory
Commission, 18 CFR part 35 [Docket No. RM17–2–
000] Uplift Cost Allocation and Transparency in
Markets Operated by Regional Transmission
Organizations and Independent System Operators
(January 19, 2017) at 5, para 6.
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Over the past few years, the
Commission has been considering
various aspects of accurate price
formation within Commission-approved
organized markets in its ongoing price
formation docket. Throughout these
proceedings the Commission has
declared that a key goal of price
formation is to ‘‘ensure that all suppliers
have an opportunity to recover their
costs.’’ 40 The Commission has
conducted technical conferences, sought
and received significant stakeholder and
public input, and issued and approved
several market rule changes to
accomplish these goals.
Pursuant to the Secretary’s authority
under section 403 of the Department of
Energy Organization Act (42 U.S.C.
7173), the Secretary is directing the
Commission to exercise its authority
under sections 205 and 206 of the
Federal Power Act to issue a final rule
requiring its organized markets to
develop and implement market rules
that accurately price generation
resources necessary to maintain the
reliability and resiliency of our Nation’s
bulk power system.
The proposed rule allows for the
recovery of costs of fuel-secure
generation units frequently relied upon
to make our grid reliable and resilient.
Such resources provide reliable
capacity, resilient generation, frequency
and voltage support, on-site fuel
inventory—in addition to providing
power for our basic needs, quality of
life, and robust economy. The rule
allows the full recovery of costs of
certain eligible units physically located
within the Commission-approved
organized markets. Eligible units must
also be able to provide essential energy
and ancillary reliability services and
have a 90-day fuel supply on site in the
event of supply disruptions caused by
emergencies, extreme weather, or
natural or man-made disasters. These
resources must be compliant with all
applicable environmental regulations
and are not subject to cost-of-service
rate regulation by any State or local
authority. The rule requires the
organized markets to establish just and
reasonable rate tariffs for the recovery of
costs and a fair rate of return.
40 FERC’s Price Formation in Energy and
Ancillary Services Markets Operated by Regional
Transmission Organizations and Independent
System Operators; Docket No. AD14–14–000;
Notice Inviting Post-Technical Workshop
Comments (January 16, 2015), Post-Technical
Conference Questions for Comment at 1.
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46945
IV. Procedures for Completion of Final
Action
A. Deadlines
Pursuant to section 403(b) of the DOE
Act, the Secretary is requiring the
Commission to consider and take final
action on the proposed rule herein
within 60 days from the date of the
publication of this NOPR in the Federal
Register. As an alternative, the Secretary
urges the Commission to issue the rule
proposed herein as an interim final rule,
effective immediately, with provision
for later modifications after
consideration of public comments. The
Secretary further directs that any final
rule adopting this proposal take effect
within 30 days of publication of such
final rule in the Federal Register.
B. Comment Procedures
To ensure that the Commission
completes final action on this proposed
rule within the deadline provided, it
will be necessary to provide for the
solicitation and review of public
comments prior to the Commission’s
final action. To facilitate such comment
process, the Commission is invited to
issue a notice providing for such
process within two business days of the
publication of this proposed rule in the
Federal Register. If the Commission
does not do so, the following comment
process will take effect:
Interested persons are invited to
submit comments on the matters and
issues proposed in this NOPR to be
adopted. Comments are due November
24, 2017. Comments must refer to
Commission Docket No. RM18–1–000,
and must include the commenter’s
name, the organization they represent, if
applicable, and their address in their
comments.
It is encouraged that comments be
filed electronically via the eFiling link
on the Commission’s Web site at https://
www.ferc.gov. The Commission accepts
most standard word processing formats.
Documents created electronically using
word processing software should be
filed in native applications or print-toPDF format and not in a scanned format.
Commenters filing electronically do not
need to make a paper filing.
Commenters that are not able to file
comments electronically must send an
original of their comments to: Federal
Energy Regulatory Commission,
Secretary of the Commission, 888 First
Street NE., Washington, DC 20426.
All comments will be placed in the
Commission’s public files and may be
viewed, printed, or downloaded
remotely as described in the Document
Availability section below. Commenters
on this proposal are not required to
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serve copies of their comments on other
commenters.
C. Compliance Filings
The Secretary further proposes that
any final rule issued by the Commission
pursuant to this NOPR shall provide
that each Commission-approved RTO
and ISO shall submit a compliance
filing, including a revised tariff
pursuant to section 205 of the Federal
Power Act, within 15 days of the
effective date of the final rule to
demonstrate that it meets the proposed
requirements set forth in any Final Rule.
This compliance deadline is for each
RTO and ISO to submit proposed tariff
changes or otherwise demonstrate
compliance with any Final Rule.
Implementing the reforms required by
any Final Rule in this proceeding may
be a complex endeavor. However,
implementation of these reforms is
important to ensure rates remain just
and reasonable. Therefore, it is
proposed that tariff changes filed in
response to a Final Rule in this
proceeding must become effective no
more than 15 days after compliance
filings are due.
To the extent that any RTO or ISO
believes that it already complies with
the reforms proposed in this NOPR, the
RTO or ISO would be required to
demonstrate how it complies in the
compliance filing required 15 days after
the effective date of any Final Rule in
this proceeding. To the extent that any
RTO or ISO seeks to argue on
compliance that its existing market rules
are consistent with or superior to the
reforms adopted in any Final Rule, the
Commission has the ability entertain
such arguments at that time.41
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V. Statutory and Regulatory Review
Section 403(a) of the DOE Act
authorizes the Secretary of Energy to
propose rules with respect to any
function within the jurisdiction of the
Commission. Section 403(b) of that Act
provides that the Commission shall
have exclusive jurisdiction over such
proposals. Accordingly, although the
proposal is that of the Secretary of
Energy, the Commission is the agency
41 See, e.g., Order No. 825, FERC Stats. & Regs.
¶ 31,384 at P 72; Demand Response Compensation
in Organized Wholesale Energy Markets, Order No.
745, FERC Stats. & Regs. ¶ 31,322, at P 4 & n.7,
order on reh’g and clarification, Order No. 745–A,
137 FERC ¶ 61,215 (2011), reh’g denied, Order No.
745–B, 138 FERC ¶ 61,148 (2012), vacated sub nom.
Elec. Power Supply Ass’n v. FERC, 753 F.3d 216
(D.C. Cir. 2014), rev’d & remanded sub nom. FERC
v. Elec. Power Supply Ass’n, 136 S. Ct. 760 (2016).
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which will take final action on this
proposed rulemaking. Therefore, the
Commission is the appropriate agency
to comply with the statutory, regulatory
or Executive Order requirements which
arise in connection with this
rulemaking. To the extent a statute,
regulation, or Executive Order requires
action before the issuance of a final rule,
the Commission should take such action
in sufficient time to permit adoption of
a final rule within the deadline for final
action set forth above.
To the extent that a NOPR—in the
event the Commission were to issue
one—would include certain
information, included below are the
following:
VI. Information Collection Statement
The Paperwork Reduction Act
(PRA) 42 requires each federal agency to
seek and obtain Office of Management
and Budget (OMB) approval before
undertaking a collection of information
directed to ten or more persons or
contained in a rule of general
applicability. OMB regulations 43
require approval of certain information
collection requirements imposed by
agency rules. Upon approval of a
collection of information, OMB will
assign an OMB control number and an
expiration date. Respondents subject to
the filing requirements of an agency rule
will not be penalized for failing to
respond to the collection of information
unless the collection of information
displays a valid OMB control number.
Similar to other recently issued rules
in its price formation docket, the
reforms proposed in this NOPR would
amend the Commission’s regulations to
improve the operation of organized
wholesale electric power markets
operated by RTOs and ISOs. The
reforms proposed in this NOPR would
require each RTO and ISO to implement
market rules that meet certain
requirements for pricing resiliency
resources. The reforms proposed in this
NOPR would require one-time filings of
tariffs with the Commission and
potential software upgrades to
implement the reforms proposed in this
NOPR. DOE anticipates the reforms
proposed in this NOPR, once
implemented, would not significantly
change currently existing burdens on an
ongoing basis. With regard to those
RTOs and ISOs that believe that they
already comply with the reforms
42 44
43 5
PO 00000
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CFR 1320.
Frm 00010
Fmt 4702
Sfmt 4702
proposed in this NOPR, they could
demonstrate their compliance in the
compliance filing required 15 days after
the effective date of any Final Rule in
this proceeding. The Commission will
submit the proposed reporting
requirements to OMB for its review and
approval under section 3507(d) of the
Paperwork Reduction Act.44
While the DOE expects the adoption
of the reforms proposed in this NOPR to
provide significant benefits, the DOE
understands implementation can be a
complex endeavor. Comments are
sought on the accuracy of provided
burden and cost estimates and any
suggested methods for minimizing the
respondents’ burdens, including the use
of automated information techniques.
Specifically, detailed comments are
sought on the potential cost and time
necessary to implement aspects of the
reforms proposed in this NOPR,
including (1) hardware, software, and
business processes changes; and (2)
processes for RTOs/ISOs to vet
proposed changes amongst their
stakeholders.
Burden Estimate: 45 The DOE believes
that the burden estimates below are
representative of the average burden on
respondents, including necessary
communications with stakeholders. The
estimated burden and cost for the
requirements contained in this NOPR
follow.46
44 44
U.S.C. 3507(d) (2012).
means the total time, effort, or financial
resources expended by persons to generate,
maintain, retain, disclose, or provide information to
or for a federal agency, including: ‘‘. . . (ii)
Developing, acquiring, installing, and utilizing
technology and systems for the purpose of
collecting, validating, and verifying information;
(iii) Developing, acquiring, installing, and utilizing
technology and systems for the purpose of
processing and maintaining information; (iv)
Developing, acquiring, installing, and utilizing
technology and systems for the purpose of
disclosing and providing information . . . .’’ 5 CFR
1320.3(b)(1) (2016). The time, effort, and financial
resources necessary to comply with a collection of
information that would be incurred by persons in
the normal course of their activities (e.g., in
compiling and maintaining business records) will
be excluded from the ‘‘burden’’ if the agency
demonstrates that the reporting, recordkeeping, or
disclosure activities needed to comply are usual
and customary.
46 This estimate is based on the Commission’s
estimate used by the Commission in 157 FERC
¶ 61,213, 18 CFR part 35 [Docket No. RM18–1–000]
Fast-Start Pricing in Markets Operated by Regional
Transmission Organizations and Independent
System Operators (December 15, 2016)]. For this
information collection, the Commission staff
estimates that industry is similarly situated in terms
of hourly cost (wages plus benefits). Based on the
Commission’s average cost (wages plus benefits) for
2016, the Commission is using $74.50/hour.
45 Burden
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Number of
respondents
Annual
number of
responses per
respondent
Total number
of responses
Average burden hours
and cost per
response
Total annual burden
hours and total
annual cost
Cost per
respondent
($)
(1)
(2)
(1) * (2) = (3)
(4)
(3) * (4) = (5)
(5) ÷ (1)
80 hours, $5,920 .........
3,853 hours, $285,122
480 hours, $35,520 .....
23,118 hours,
$1,710,732.
........................
........................
3,933 hours, $291,042
23,598 hours,
$1,746,252.
Tariff filing costs ...........
Implementation costs ...
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Total (one-time in
Year 1).
6
6
1
1
6
6
........................
........................
........................
Cost to Comply: The DOE has
projected the total cost of compliance,
all within six months of a Final Rule
plus initial implementation, to be
$1,746,252. After Year 1, the reforms
proposed in this NOPR, once
implemented, would not significantly
change existing burdens on an ongoing
basis.
Title: PRA approval for this collection
of information will be obtained by
FERC.
Action: Proposed revisions to an
information collection.
OMB Control No.: [TBD].
Respondents for this Rulemaking:
RTOs and ISOs.
Frequency of Information: One-time
during year one.
Necessity of Information: The DOE
proposes this rule to improve
competitive wholesale electric markets
in the RTO and ISO regions.
Internal Review: The DOE has
reviewed the proposed changes and has
determined that the changes are
necessary. These requirements conform
to the Commission’s need for efficient
information collection, communication,
and management within the energy
industry. This estimate is based on the
Commission’s estimate in the NOPR for
‘‘Fast-Start Pricing in Markets Operated
by Regional Transmission Organizations
and Independent System Operators’’ 47
and DOE believes that the NOPR is
similar and would impose similar
burden associated with the information
collection requirements.
Interested persons may obtain
information on the reporting
requirements by contacting the
following: Federal Energy Regulatory
Commission, 888 First Street NE.,
Washington, DC 20426, Attention:
Office of the Executive Director, email:
DataClearance@ferc.gov, Phone: (202)
502–6608, fax: (202) 273–0873.
Comments on the collection of
information and the associated burden
47 157 FERC ¶ 61,213, 18 CFR part 35 [Docket No.
RM18–1–000], Fast-Start Pricing in Markets
Operated by Regional Transmission Organizations
and Independent System Operators (December 15,
2016).
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estimate in the proposed rule should be
sent to the Commission in this docket
and may also be sent to the Office of
Information and Regulatory Affairs,
Office of Management and Budget, 725
17th Street NW., Washington, DC 20503
[Attention: Desk Officer for the Federal
Energy Regulatory Commission], at the
following email address: oira_
submission@omb.eop.gov. Please refer
to Docket No.: RM18–1–000 in your
submission.
VII. Environmental Analysis
Though the Commission is required to
prepare an Environmental Assessment
or an Environmental Impact Statement
for any action that may have a
significant adverse effect on the human
environment,48 the Commission has
previously concluded 49 that neither an
Environmental Assessment nor an
Environmental Impact Statement is
required for a NOPR under section
380.4(a)(15) of the Commission’s
regulations, which provides a
categorical exemption for approval of
actions under sections 205 and 206 of
the FPA relating to the filing of
schedules containing all rates and
charges for the transmission or sale of
electric energy subject to the
Commission’s jurisdiction, plus the
classification, practices, contracts and
regulations that affect rates, charges,
classifications, and services.50 This
NOPR would require an exercise of the
Commission’s authority under sections
205 and 206 of the FPA.
VIII. Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980
(RFA) 51 generally requires a description
and analysis of proposed rules that will
have significant economic impact on a
substantial number of small entities.
48 Regulations Implementing the National
Environmental Policy Act of 1969, Order No. 486,
FERC Stats. & Regs. ¶ 30,783 (1987).
49 157 FERC ¶ 61,213, 18 CFR part 35 [Docket No.
RM18–1–000] Fast-Start Pricing in Markets
Operated by Regional Transmission Organizations
and Independent System Operators (December 15,
2016)] at para. 73.
50 18 CFR 380.4(a)(15).
51 5 U.S.C. 601–12.
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291,042
The RFA does not mandate any
particular outcome in a rulemaking. It
only requires consideration of
alternatives that are less burdensome to
small entities and an agency
explanation of why alternatives were
rejected. The Small Business
Administration’s (SBA) Office of Size
Standards develops the numerical
definition of a small business.52 These
standards are provided on the SBA Web
site.53
The SBA classifies an entity as an
electric utility if it is primarily engaged
in the transmission, generation and/or
distribution of electric energy for sale.
Under this definition, the six RTOs/
ISOs are considered electric utilities,
specifically focused on electric bulk
power and control. The size criterion for
a small electric utility is 500 or fewer
employees.54 Since every RTO/ISO has
more than 500 employees, none are
considered small entities. Furthermore,
because of their pivotal roles in
wholesale electric power markets in
their regions, none of the RTOs/ISOs
meet the last criterion of the two-part
RFA definition of a small entity: ‘‘not
dominant in its field of operation.’’ 55 As
a result, we certify that the reforms
required by this NOPR would not have
a significant economic impact on a
substantial number of small entities.
IX. Executive Order 12866
This proposed rule has been
determined not to be a significant
regulatory action for purposes of
52 13
CFR 121.101.
Small Business Administration, Table of
Small Business Size Standards Matched to North
American Industry Classification System Codes
(effective Feb. 26, 2016), https://www.sba.gov/sites/
default/files/files/Size_Standards_Table.pdf.
54 13 CFR 121.201 (Sector 22, Utilities).
55 The RFA definition of ‘‘small entity’’ refers to
the definition provided in the Small Business Act,
which defines a ‘‘small business concern’’ as a
business that is independently owned and operated
and that is not dominant in its field of operation.
The Small Business Administration’s regulations at
13 CFR 121.201 define the threshold for a small
Electric Bulk Power Transmission and Control
entity (NAICS code 221121) to be 500 employees.
See 5 U.S.C. 601(3) (citing to section 3 of the Small
Business Act, 15 U.S.C. 632).
53 U.S.
E:\FR\FM\10OCP1.SGM
10OCP1
46948
Federal Register / Vol. 82, No. 194 / Tuesday, October 10, 2017 / Proposed Rules
Executive Order 12866. As a result this
rule was not reviewed by the Office of
Management and Budget.
X. Document Availability
In addition to publishing the full text
of this document in the Federal
Register, the Commission provides all
interested persons an opportunity to
view and/or print the contents of this
document via the Internet through the
Commission’s Home Page (https://
www.ferc.gov) and in the Commission’s
Public Reference Room during normal
business hours (8:30 a.m. to 5:00 p.m.
Eastern time) at 888 First Street NE.,
Room 2A, Washington, DC 20426.
From the Commission’s Home Page
on the Internet, this information is
available on eLibrary. The full text of
this document is available on eLibrary
in PDF and Microsoft Word format for
viewing, printing, and/or downloading.
To access this document in eLibrary,
type the docket number excluding the
last three digits of this document in the
docket number field.
83. User assistance is available for
eLibrary and the Commission’s Web site
during normal business hours from the
Commission’s Online Support at (202)
502–6652 (toll free at 1–866–208–3676)
or email at ferconlinesupport@ferc.gov,
or the Public Reference Room at (202)
502–8371, TTY (202) 502–8659. Email
the Public Reference Room at
public.referenceroom@ferc.gov.
XI. Approval of the Office of the
Secretary
The Secretary of Energy has approved
the publication of this proposed rule.
List of Subjects in 10 CFR Part 35
Electric power rates, electric utilities,
reporting and recordkeeping
requirements.
Issued in Washington, DC, on September
29, 2017.
Rick Perry,
Secretary of Energy.
Pmangrum on DSK3GDR082PROD with PROPOSALS
For the reasons stated in the
preamble, DOE proposes that FERC
amend part 35, chapter I of title 18,
subchapter B, Code of Federal
Regulations as set forth below:
PART 35—FILING OF RATE
SCHEDULES AND TARIFFS
1. The authority citation for part 35
continues to read as follows:
■
Authority: 16 U.S.C. 791a–825r; 2601–
2645; 31 U.S.C. 9701; 42 U.S.C. 7101–7352.
2. Section 35.28 is amended by adding
paragraph (g)(10) to read as follows:
■
VerDate Sep<11>2014
14:57 Oct 06, 2017
Jkt 244001
§ 35.28 Non-discriminatory open access
transmission tariff.
*
*
*
*
(g) * * *
(10) Pricing eligible grid reliability
and resiliency resources.
(i) Definition of eligible grid reliability
and resiliency resources. An eligible
grid reliability and resiliency resource is
any resource that:
(A) Is an electric generation resource
physically located within a
Commission-approved independent
system operator or regional transmission
organization;
(B) Is able to provide essential energy
and ancillary reliability services,
including but not limited to voltage
support, frequency services, operating
reserves, and reactive power;
(C) Has a 90-day fuel supply on site
enabling it to operate during an
emergency, extreme weather conditions,
or a natural or man-made disaster;
(D) Is compliant with all applicable
federal, state, and local environmental
laws, rules, and regulations; and
(E) Is not subject to cost of service rate
regulation by any state or local
regulatory authority.
(ii) Scope of application. The
requirements of this rule shall apply to
Commission-approved independent
system operators or regional
transmission organizations with energy
and capacity markets and a tariff that
contains a day-ahead and a real-time
market or the functional equivalent. The
application of this rule must be
consistent between the day-ahead and
real-time markets.
(iii) Reliability and resiliency rate. (A)
Each Commission-approved
independent system operator or regional
transmission organization shall
establish a tariff that provides a just and
reasonable rate for the—
(1) Purchase of electric energy from an
eligible reliability and resiliency
resource; and
(2) recovery of costs and a return on
equity for such resource dispatched
during grid operations.
(B) The just and reasonable rate shall
include pricing to ensure that each
eligible resource is fully compensated
for the benefits and services it provides
to grid operations, including reliability,
resiliency and on-site fuel-assurance,
and that each eligible resource recovers
its fully allocated costs and a fair return
on equity.
(iv) Reliability and resiliency costs.
Compensable costs shall include, but
not be limited to, operating and fuel
expenses, costs of capital and debt, and
a fair return on equity and investment.
DEPARTMENT OF HOMELAND
SECURITY
*
[FR Doc. 2017–21396 Filed 10–6–17; 8:45 am]
BILLING CODE 6717–01–P
PO 00000
Frm 00012
Fmt 4702
Sfmt 4702
Coast Guard
33 CFR Part 117
[Docket No. USCG–2017–0750]
RIN 1625–AA09
Drawbridge Operation Regulation;
Pequonnock River, Bridgeport, CT
Coast Guard, DHS.
Notice of proposed rulemaking.
AGENCY:
ACTION:
The Coast Guard proposes to
modify the operating schedule that
governs the Metro-North Peck Bridge
across the Pequonnock River, mile 0.3,
at Bridgeport, Connecticut. The owner
of the bridge, Metro-North Railroad, has
submitted a request that vessels seeking
an opening of the draw submit a
minimum of four hours of advance
notice. It is expected this change to the
regulations will better serve the needs of
the public, particularly commuters and
commercial interests utilizing the
Northeast Corridor rail spur, while
continuing to meet the reasonable needs
of navigation.
DATES: Comments and related material
must reach the Coast Guard on or before
November 9, 2017.
ADDRESSES: You may submit comments
identified by docket number USCG–
2017–0750 using Federal eRulemaking
Portal at https://www.regulations.gov.
See the ‘‘Public Participation and
Request for Comments’’ portion of the
SUPPLEMENTARY INFORMATION section
below for instructions on submitting
comments.
SUMMARY:
If
you have questions on this proposed
rule, call or email Mr. James Moore,
Project Officer, First Coast Guard
District, telephone 212–514–4334, email
James.M.Moore2@uscg.mil.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
I. Table of Abbreviations
CFR Code of Federal Regulations
DHS Department of Homeland Security
E.O. Executive order
FR Federal Register
NPRM Notice of proposed rulemaking
Pub. L. Public Law
§ Section
U.S.C. United States Code
II. Background, Purpose and Legal
Basis
The Metro-North Peck Bridge, mile
0.3, across the Pequonnock River at
Bridgeport, Connecticut, has a vertical
clearance of 26 feet at Mean High Water
and 32 feet at Mean Low Water when
E:\FR\FM\10OCP1.SGM
10OCP1
Agencies
[Federal Register Volume 82, Number 194 (Tuesday, October 10, 2017)]
[Proposed Rules]
[Pages 46940-46948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21396]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 35
[Docket No. RM18-1-000]
Grid Resiliency Pricing Rule
AGENCY: Federal Energy Regulatory Commission, Department of Energy.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: Pursuant to the Department of Energy Organization Act (DOE
Act), the Secretary of Energy (Secretary) is proposing a rule for final
action by the Federal Energy Regulatory Commission (Commission or
FERC). The Secretary is proposing the Commission exercise its authority
under the Federal Power Act (FPA) to establish just and reasonable
rates for wholesale electricity sales. Under the proposal, the
Commission will impose rules on Commission-approved independent system
operators
[[Page 46941]]
(ISOs) and regional transmission organizations (RTOs) to ensure that
certain reliability and resilience attributes of electric generation
resources are fully valued. The Secretary is directing the Commission
to take final action on this proposal within 60 days of publication of
this proposed rule in the Federal Register or, in the alternative, to
issue the rule as an interim final rule immediately, with provision for
later modifications after consideration of public comments. The
Secretary further directs that any final rule adopting this proposal
take effect within 30 days of publication of such final rule in the
Federal Register and proposes that each ISO and RTO subject to the rule
shall submit a compliance filing within 15 days of the effective date
of such final rule.
DATES: The Commission is directed either to take final action by
December 11, 2017 or to issue the proposed rule as an interim final
rule. Public comment is due either November 24, 2017 or according to a
schedule to be published by the Commission.
ADDRESSES: Comments, identified by docket number, may be filed in the
following ways:
Email: Electronic Filing through https://www.ferc.gov.
Documents created electronically using word processing software should
be filed in native applications or print-to-PDF format and not in a
scanned format.
Mail/Hand Delivery: Those unable to file electronically
may mail or hand-deliver comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Comment
Procedures Section of this document.
FOR FURTHER INFORMATION CONTACT: Ronald (R.J.) Colwell, U.S. Department
of Energy, Office of the Assistant General Counsel for Electricity and
Fossil Energy (GC-76), Forrestal Building, Room 6D-033, 1000
Independence Avenue SW., Washington, DC 20585; (202) 586-9507; email
ronald.colwell@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Statutory Background
II. Discussion of Proposed Rule
A. Affordable, Reliable and Resilient Electricity Is Vital to
the Economic and National Security of the United States and Its
People
B. There Have Been Significant Retirements of Fuel-Secure
Generation
C. The 2014 Polar Vortex Exposed Problems With the Resiliency of
the Electric Grid
D. Regulated Wholesale Power Markets Are Not Adequately Pricing
Resiliency Attributes of Fuel-Secure Power
E. The Preservation of Generation Diversity Will Benefit
Consumers
F. NERC Warns That Premature Retirements of Fuel-Secure
Generation Threaten the Reliability and Resiliency of the Bulk Power
System
G. The DOE Staff Report Made Clear the Challenges to the Grid
and That Resiliency Must Be Addressed
H. Congress Is Concerned About the Potential Loss of Valuable
Generation Resources
I. The FERC Is Cognizant of the Problem and Has the Necessary
Information on Which To Act Expeditiously
III. Proposal
IV. Procedures for Completion of Final Action
A. Deadlines
B. Comment Procedures
C. Compliance Filings
V. Statutory and Regulatory Review
VI. Information Collection Statement
VII. Environmental Analysis
VIII. Regulatory Flexibility Act
IX. Executive Order 12866
X. Document Availability
XI. Approval of the Office of the Secretary
I. Statutory Background
Section 403 of the DOE Act authorizes the Secretary of Energy to
propose rules for Commission action regarding certain Commission
functions, including its electricity rate-related functions under
sections 205 and 206 of the Federal Power Act, and to set reasonable
time limits for Commission completion of the proposed action. Section
403(a) provides for the initiation of rulemaking proceedings by either
the Secretary or the Commission. In the exercise of this authority, the
Commission proposes rules by publishing Notices of Proposed Rulemaking
(NOPR) in the Federal Register. The Secretary has likewise exercised
his section 403 authority by publishing NOPRs in the Federal Register.
This authority was first exercised by the Secretary in 1979 by
publication of a NOPR (``Transportation Certificates for Natural Gas,''
44 FR 17644, March 22, 1979). The Secretary has subsequently acted
under section 403 on several occasions by publication of a NOPR in the
Federal Register. By proposing a rule in this manner, the Secretary
enables the Commission to proceed directly to the consideration of, and
final action on, the proposal and eliminates the need for the
Commission to order or publish its own separate rulemaking proposal.
Independent of the Secretary's action under section 403(a), FERC
has full authority to establish the rule set forth in this proposed
rule. Specifically, FERC has authority to establish just and reasonable
rates, terms, and conditions for wholesale electricity sales under
sections 205 and 206 of the Federal Power Act, and FERC has discretion
to do so by means of a rulemaking pursuant to section 403(c), which
authorizes FERC to use rulemaking procedures to conduct its Federal
Power Act functions relating to rates and charges. Transmission Access
Policy Study Group v. F.E.R.C., 225 F.3d 667, 688 (D.C. Cir. 2000),
aff'd 535 U.S. 1 (2002). FERC has on numerous occasions imposed market
rules on ISOs and RTOs. See 18 CFR part 35.
Furthermore, section 403(b) requires that FERC ``shall consider and
take final action on any proposal made by the Secretary [under
subsection (a)] in an expeditious manner in accordance with such
reasonable time limits as may be set by the Secretary for the
completion of action by the Commission on any such proposal.'' The
Secretary is therefore authorized to direct the Commission to consider
and take final action within the reasonable time limits the Secretary
establishes in this proposed rule. Given the extensive record the
Commission has already developed on the subject matter of this proposed
rule, the time limit for final action provided herein allows adequate
time for the Commission to receive and consider public comments.
II. Discussion of the Proposed Rule
The resiliency of the nation's electric grid is threatened by the
premature retirements of power plants that can withstand major fuel
supply disruptions caused by natural or man-made disasters and, in
those critical times, continue to provide electric energy, capacity,
and essential grid reliability services. These fuel-secure resources
are indispensable for the reliability and resiliency of our electric
grid--and therefore indispensable for our economic and national
security. It is time for the Commission to issue rules to protect the
American people from energy outages expected to result from the loss of
this fuel-secure generation capacity.
A. Affordable, Reliable and Resilient Electricity Is Vital to the
Economic and National Security of the United States and Its People
Ensuring that American families and businesses have access to
reliable, resilient and affordable electricity is vital to the economy,
national security, and quality of life. From heating homes in the
winter to cooling them in the summer, providing lighted streets so
[[Page 46942]]
people can walk safely at night, powering machines and technology that
create jobs, and connecting us through smart phones and the internet--
electricity is a key driver of America's economic prosperity and the
basic necessities of life. The American economy, government and
national defense all depend on electricity. Therefore, ensuring a
reliable and resilient electric supply and corresponding supply chain
are also vital to national security.
The sheer size and impact of the electricity market on our economy
cannot be overstated. According to the Department of Energy's January
2017 Quadrennial Energy Review (January 2017 QER): In the United
States, there are around 7,700 operating power plants that generate
electricity from a variety of primary energy sources; 707,000 miles of
high-voltage transmission lines; more than 1 million rooftop solar
installations; 55,800 substations; 6.5 million miles of local
distribution lines; and 3,354 distribution utilities delivering
electricity to 148.6 million customers. The total amount of money paid
by end users for electricity in 2015 was about $400 billion. This
drives an $18.6 trillion U.S. gross domestic product and significantly
influences global economic activity totaling roughly $80 trillion.\1\
---------------------------------------------------------------------------
\1\ Transforming the Nation's Electricity System: The Second
Installment of the Quadrennial Energy Review, January 6, 2017
(January 2017 QER).
---------------------------------------------------------------------------
B. There Have Been Significant Retirements of Fuel-Secure Generation
Market changes are resulting in a significant loss of fuel-secure
generation. According to the January 2017 QER: Currently, the changing
electricity sector is causing the closure of many coal and nuclear
plants in a shift from recent trends. From 2000 through 2009, power
plant retirements were dominated by natural gas steam turbines. Over
the past 6 years (2010-2015), power plant retirements were dominated by
coal plants (37 GW), which accounted for over 52 percent of recently
retired power plant capacity. Over the next 5 years (between 2016 and
2020), 34.4 GW of summer capacity is planned to be retired, and 79
percent of this planned retirement capacity are coal and natural gas
plants (49 percent and 30 percent, respectively). The next largest set
of planned retirements are nuclear plants (15 percent).\2\
---------------------------------------------------------------------------
\2\ January 2017 QER at 3-73.
---------------------------------------------------------------------------
The ``Staff Report to the Secretary on Electricity Markets and
Reliability'' (``DOE Staff Report'') \3\ also discusses the large
number of fuel-secure plants that have retired or are scheduled to
retire:
---------------------------------------------------------------------------
\3\ U.S. Department of Energy, Staff Report to the Secretary on
Electricity Markets and Reliability, August 2017 (DOE Staff Report).
---------------------------------------------------------------------------
Between 2002 and 2016, 531 coal generating units
representing approximately 59,000 MW of generation capacity retired
from the U.S. generation fleet.\4\
---------------------------------------------------------------------------
\4\ DOE Staff Report at 22.
---------------------------------------------------------------------------
EIA reported that coal-fired power plants made up more
than 80 percent of the 18,000 MW of electric generating capacity that
retired in 2015.\5\
---------------------------------------------------------------------------
\5\ DOE Staff Report at 22, citing U.S. Energy Information
Administration, Today in Energy, March 8, 2016. More recent EIA data
shows an overall larger amount of 2015 generation capacity
retirements (25,400 MW), of which coal-fired power plants made up
72%. EIA Monthly Update to the Annual Electric Generator Report,
Form EIA-860m, March 2017.
---------------------------------------------------------------------------
It is anticipated that approximately 12,700 MW of coal
generation will retire through 2020.\6\
---------------------------------------------------------------------------
\6\ U.S. Energy Information Administration (EIA), Monthly Update
to the Annual Electric Generator Report, Form EIA-860m, June 2017,
https://www.eia.gov/electricity/data/eia860m/.
---------------------------------------------------------------------------
Between 2002 and 2016, 4,666 MW of nuclear generating
capacity was announced for retirement, or approximately 4.7 percent of
the U.S. total.\7\
---------------------------------------------------------------------------
\7\ DOE Staff Report at 29.
---------------------------------------------------------------------------
Eight reactors representing 7,167 MW of nuclear capacity
(7.2 percent of U.S. nuclear capacity and 0.6 percent of total U.S.
generating capacity) have announced retirement plans since 2016. This
does not include seven reactors that averted early retirement through
state action.\8\
---------------------------------------------------------------------------
\8\ DOE Staff Report at 30.
---------------------------------------------------------------------------
C. The 2014 Polar Vortex Exposed Problems With the Resiliency of the
Electric Grid
In early 2014, the Polar Vortex (a band of very cold weather spread
across much of the eastern and central United States) created record-
high winter peak electric demand for heating and equally high demand
for natural gas for residential heating. During the Polar Vortex, PJM
Interconnection (PJM) \9\ struggled to meet demand for electricity
because a significant amount of generation was not available to run.
According to the DOE Staff Report, the loss of generation capacity
could have been catastrophic, but a number of fuel-secure plants that
were scheduled for retirement were called upon to meet the need for
electricity: American Electric Power reported that it deployed 89
percent of its coal units scheduled for retirement in 2014 to meet
demand during the Polar Vortex, and Southern Company reported using 75
percent of its coal units scheduled for closure. Using these retiring
units enabled utilities to meet customer demand during a period when
already limited natural gas resources were diverted from electricity
production to meet residential heating needs. Once retired, however,
these units will not be available for the next unseasonably cold
winter.\10\
---------------------------------------------------------------------------
\9\ PJM Interconnection is the regional transmission
organization (``RTO'') serving thirteen states and the District of
Columbia.
\10\ DOE Staff Report, at 98 (internal citations omitted).
---------------------------------------------------------------------------
Likewise, the DOE Staff Report notes that, overall, nuclear
generators performed extremely well during the Polar Vortex, with an
average capacity factor of 95 percent.\11\
---------------------------------------------------------------------------
\11\ DOE Staff Report, at 95 (internal citations omitted).
---------------------------------------------------------------------------
Sixty-five million people within the PJM footprint could have been
affected if these units were not available. The 2014 Polar Vortex was a
warning that the current and scheduled retirements of fuel-secure
plants could threaten the reliability and resiliency of the electric
grid.\12\
---------------------------------------------------------------------------
\12\ DOE Staff Report, at 98-99, 118.
---------------------------------------------------------------------------
D. Regulated Wholesale Power Markets Are Not Adequately Pricing
Resiliency Attributes of Fuel-Secure Power
There is a growing recognition that organized markets do not
necessarily pay generators for all the attributes that they provide to
the grid, including resiliency. Because wholesale pricing in those
markets does not adequately consider or accurately value those
benefits, fuel-secure generation resources are often not compensated
for those benefits.
The January 2017 QER summarizes the problem of how regulated
wholesale markets are not adequately pricing resiliency attributes of
fuel-secure generation: Reliability investments are typically
incorporated into ratemaking processes for all electric utilities.
Supplementary investments for recovery from outage events also are
handled through established ratemaking processes. Resilience
requirements tend to be valued as contributions to reliability and
incorporated as part of ratemaking processes. These processes are more
easily executed in structures that are traditional end-to-end,
vertically integrated electricity delivery services; other market
structures complicate reliability and resilience investment decision-
making. Short-run markets may not provide adequate price signals to
ensure long-term investments
[[Page 46943]]
in appropriately configured capacity. Also, resource valuations tend
not to incorporate superordinate network and/or social values such as
enhancing resilience into resource or . . . investment decision making.
The increased importance of system resilience to overall grid
reliability may require adjustments to market mechanisms that enable
better valuation.\13\
---------------------------------------------------------------------------
\13\ January 2017 QER, at 4-41 (emphasis added).
---------------------------------------------------------------------------
A recent study by IHS Markit amplifies the same point: ``the
increasing cost of ensuring power system resilience is exposing the
problem that some current wholesale market price formation rules do not
fully compensate generating resources for providing the desired power
system supply resiliency.'' \14\
---------------------------------------------------------------------------
\14\ IHS Markit, ``Ensuring Resilient and Efficient Electricity
Generation: The Value of the current diverse US power supply
portfolio'' at 8.
---------------------------------------------------------------------------
E. The Preservation of Generation Diversity Will Benefit Consumers
The IHS Markit study also concludes that preservation of generation
diversity provided by fuel-secure resources benefits consumers: ``The
current diversified US electric supply portfolio lowers the cost of
electricity production by about $114 billion per year and lowers the
average retail price of electricity by 27%'' compared with a ``less
efficient diversity case'' involving ``no meaningful contributions from
coal or nuclear resources.'' \15\
---------------------------------------------------------------------------
\15\ Id. at 4-5.
---------------------------------------------------------------------------
F. NERC Warns That Premature Retirements of Fuel-Secure Generation
Threaten the Reliability and Resiliency of the Bulk Power System
The North American Electric Reliability Corporation (NERC) (the
FERC-designated Electric Reliability Organization), whose mission is to
assure the reliability and security of the bulk power system in North
America, states: The North American electric power system is undergoing
a rapid and significant transformation with ongoing retirements of
fossil-fired and nuclear capacity, as well as growth in natural gas,
wind, and solar resources. This shift is caused by several drivers,
such as federal, state, and provincial policies, low natural gas
prices, electricity market forces, and integration of both distributed
and utility-scale renewable resources. The changing resource mix is
altering the operating characteristics of the bulk power system (BPS).
These changing characteristics must be well understood and properly
managed in order to assure continued reliability and ensure
resiliency.\16\
---------------------------------------------------------------------------
\16\ NERC Letter to Secretary of Energy Rick Perry, May 9, 2017,
Attachment ``Synopsis of NERC Reliability Assessments'' (Synopsis)
at 1.
---------------------------------------------------------------------------
Specifically, according to NERC, ``Coal-fired and nuclear
generation have the added benefits of high availability rate, low
forced outages, and secured on-site fuel. Many months of on-site fuel
allow these units to be operated in a manner independent of supply
chain disruptions.'' \17\
---------------------------------------------------------------------------
\17\ NERC, Synopsis at 2.
---------------------------------------------------------------------------
As a consequence, NERC warns, ``Premature retirements of fuel
secure baseload generating stations reduces resilience to fuel supply
disruptions.'' \18\
---------------------------------------------------------------------------
\18\ NERC, Synopsis at 3.
---------------------------------------------------------------------------
G. The DOE Staff Report Made Clear the Challenges to the Grid and That
Resiliency Must Be Addressed
The DOE Staff Report confirms these observations and exposes the
potential challenges and threats to the reliability and resiliency of
the electric grid, as well as the economic hardship faced by some of
the most resilient types of generation. Among other things, the DOE
Staff Report warns that premature retirements of fuel-secure resources
impose serious risks: Ultimately, the continued closure of traditional
baseload power plants calls for a comprehensive strategy for long-term
reliability and resilience. States and regions are accepting increased
risks that could affect the future reliability and resilience of
electricity delivery for consumers in their regions. Hydropower,
nuclear, coal, and natural gas power plants provide ERS [(``essential
reliability services'')] and fuel assurance critical to system
resilience. A continual comprehensive regional and national review is
needed to determine how a portfolio of domestic energy resources can be
developed to ensure grid reliability and resilience.\19\
---------------------------------------------------------------------------
\19\ ``Staff Report to the Secretary on Electricity Markets and
Reliability,'' U.S. Department of Energy, August 2017 at 14
(emphasis added).
---------------------------------------------------------------------------
The DOE Staff Report also recognizes that ``system fuel supply
chain disruptions can impact many generators during a single widespread
fuel shortage event,'' and that ``[n]uclear and coal plants typically
have advantages associated with onsite fuel storage[.]'' \20\ In light
of these facts, the DOE Staff Report calls for prompt action: Markets
need further study and reform to address future services essential to
grid reliability and resilience. System operators are working toward
recognizing, defining, and compensating for resource attributes that
enhance reliability and resilience (on both the supply and demand
side). However, further efforts should reflect the urgent need for
clear definitions of reliability- and resilience-enhancing attributes
and should quickly establish the market means to value or the
regulatory means to provide them.\21\
---------------------------------------------------------------------------
\20\ DOE Staff Report, at 91. For example, ``coal plants . . .
maintain onsite coal stockpiles to accommodate both normal variance
in deliveries and the possibility of a major supply disruption. Coal
stockpiles have recently been slightly smaller than historical
averages, while days of burn have increased slightly relative to
historic averages from the 70-80 range to the 85-100-day range.''
Id., at 95.
\21\ Id., at 10 (emphasis added).
---------------------------------------------------------------------------
The DOE Staff Report's first recommendation for protecting the
resiliency of the electric grid is to correct distortions in price
formation in the organized markets: FERC should expedite its efforts
with states, RTO/ISOs, and other stakeholders to improve energy price
formation in centrally-organized wholesale electricity markets. After
several years of fact finding and technical conferences, the record now
supports energy price formation reform, such as the proposals laid out
by PJM and others.\22\
---------------------------------------------------------------------------
\22\ Id., at 126 (internal citations omitted).
---------------------------------------------------------------------------
H. Congress Is Concerned About the Potential Loss of Valuable
Generation Resources
In July 2015, the chairmen of the Senate Committee on Energy and
Natural Resources, the House Committee on Energy and Commerce, and the
House Subcommittee on Energy and Power, sent correspondence to the
Commission about challenges in the Commission-approved organized
electricity markets.\23\ The chairmen expressed their concern that
``[v]aluable baseload power plants in these markets, including reliable
nuclear and coal-[fired] plants, are facing premature retirement.''
\24\
---------------------------------------------------------------------------
\23\ Letter from Fred Upton, Lisa Murkowski, and Ed Whitfield,
U.S. Congress, to Norman Bay, Chairman, FERC (July 8, 2015).
\24\ Id.
---------------------------------------------------------------------------
More specifically, the Chairmen's letter stated: ``There are
growing indications that owners and operators of major baseload power
plants are facing imminent decisions regarding their continued economic
viability'' \25\ and ``broad scale premature retirements of otherwise
performing baseload units because of market rules--rather than market
forces--would represent failure of regulation.'' \26\ The letter made
clear that electricity market prices for energy and capacity should
reflect the ``true marginal cost of supply, promote
[[Page 46944]]
necessary investment, and produce meaningful price signals that clearly
indicate where new supply and investment are needed.\27\
---------------------------------------------------------------------------
\25\ Id.
\26\ Id.
\27\ Id.
---------------------------------------------------------------------------
I. The FERC Is Cognizant of the Problem and Has the Necessary
Information on Which To Act Expeditiously
Over the past several years, the Commission has developed an
extensive record on price formation in the Commission-approved ISOs and
RTOs. The Commission has recognized that there are deficiencies in the
way the regulated wholesale power markets price power (i.e., energy,
capacity, and ancillary services) and that these deficiencies are
undermining reliability and resiliency.
Beginning in June 2013, the Commission recognized the changing mix
of generation resources, determined that existing capacity markets were
not providing a sufficiently reliable supply of electricity, predicted
the loss of fuel-secure generation, and sought input from the public
through proceedings on price formation in the organized markets. In a
2013 technical conference, FERC explained: The purpose of the technical
conference is to consider how current centralized capacity market rules
and structures are supporting the procurement and retention of
resources necessary to meet future reliability and operational needs.
Since their establishment, centralized capacity markets have continued
to evolve. Meanwhile, the mix of resources is also evolving in response
to changing market conditions, including low natural gas prices, state
and federal policies encouraging the entry of renewable resources and
other specific technologies, and the retirement of aging generation
resources. This changing resource mix may result in future reliability
and operational needs that are different than those of the past.\28\
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\28\ FERC, Centralized Capacity Markets in Regional Transmission
Organizations and Independent System Operators, Docket No. AD13-7-
000, p. 1.
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In December 2014, PJM requested that the Commission issue an order
approving PJM's revisions to its capacity market rules to require
resources participating in the capacity market to honor contractual
commitments to deliver electricity at any time of the year.\29\ The
Commission determined that the existing capacity market was not
providing a sufficiently reliable supply of electricity and, to remedy
this urgent shortfall, accepted PJM's proposed market rule changes.
FERC's order was recently upheld by the D.C. Circuit in Advanced Energy
Management Alliance v. FERC, D.C. Cir. (June 30, 2017).
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\29\ 151 FERC ] 61,208, PJM Interconnection, L.L.C., Order on
Proposed Tariff Revisions (2015); rehearing denied, PJM
Interconnection, L.L.C., Order on Rehearing and Compliance, 155 FERC
] 61,157 (2016).
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A year after its initial 2013 proceeding, the Commission initiated
a proceeding in June 2014, entitled ``Price Formation in Energy and
Ancillary Services Markets in Regional Transmission Organizations and
Independent System Operators'' (Price Formation Proceeding) to evaluate
issues regarding price formation in the energy and ancillary services
markets operated by RTOs and ISOs.\30\ In a December 2014 staff
analysis for this proceeding, the FERC Staff observes that ``[a]ll RTOs
and ISOs have identified a class of reliability and operational issues
that are incorporated into the day-ahead and real-time market processes
but which are not reflected in day-ahead and real-time energy and
ancillary services prices.'' \31\
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\30\ Price Formation in Energy and Ancillary Services Markets in
Regional Transmission Organizations and Independent System
Operators, Docket No. AD14-14-000, June 2014.
\31\ Staff Analysis of Operator[hyphen]Initiated Commitments in
RTO and ISO Markets, Price Formation in Organized Wholesale
Electricity Markets, [Docket No. AD14-14-000], December 2014 at 5.
---------------------------------------------------------------------------
The Price Formation Proceeding resulted in a number of additional
proceedings and rulemakings, some of which are described below:
In November 2016, under Order No. 825, Settlement
Intervals and Shortage Pricing in Markets Operated by Regional
Transmission Organizations and Independent System Operators, the
Commission directed reforms to settlement intervals and shortage
pricing to more accurately compensate resources based on the value they
provide the system.\32\
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\32\ 155 FERC ] 61,276; 18 CFR part 35 [Docket No. RM15-24-000,
Order No. 825] Settlement Intervals and Shortage Pricing in Markets
Operated by Regional Transmission Organizations and Independent
System Operators (Issued June 16, 2016).
---------------------------------------------------------------------------
In November 2016, pursuant to a NOPR entitled Essential
Reliability Services and the Evolving Bulk-Power System--Primary
Frequency Response, the Commission proposed a rule to require all newly
interconnecting large and small generating facilities, both synchronous
and non-synchronous, to install and enable primary frequency response
capability as a condition of interconnection.\33\
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\33\ 157 FERC ] 61,122, Essential Reliability Services and the
Evolving Bulk-Power System--Primary Frequency Response, Notice of
Proposed Rulemaking (November 17, 2016).
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In December 2016, under Order 831, Offer Caps in Markets
Operated by Regional Transmission Organizations and Independent System
Operators, the Commission raised existing caps on energy market offers
and allowed those higher-price offers to set market clearing
prices.\34\
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\34\ 157 FERC ] 61,115, 18 CFR part 35 [Docket No. RM16-5-000;
Order No. 831] Offer Caps in Markets Operated by Regional
Transmission Organizations and Independent System Operators
(November 17, 2016).
---------------------------------------------------------------------------
In December 2016, pursuant to a NOPR entitled Fast-Start
Pricing in Markets Operated by Regional Transmission Organizations and
Independent System Operators, the Commission proposed revising its
regulations to require RTOs and ISOs to incorporate market rules that
properly price fast-start resources.\35\ As stated in the NOPR, the
proposed Fast-Start Pricing ``should lead to prices that more
transparently reflect the marginal cost of serving load, which will
reduce uplift costs and thereby improve price signals to support
efficient investments.'' \36\
---------------------------------------------------------------------------
\35\ 157 FERC ] 61,213, 18 CFR part 35 [Docket No. RM18-1-000]
Fast-Start Pricing in Markets Operated by Regional Transmission
Organizations and Independent System Operators (December 15, 2016).
\36\ 157 FERC ] 61,213, 18 CFR part 35 [Docket No. RM18-1-000]
Fast-Start Pricing in Markets Operated by Regional Transmission
Organizations and Independent System Operators (December 15, 2016),
at 1.
---------------------------------------------------------------------------
In January 2017, the Commission issued a NOPR entitled
Uplift Cost Allocation and Transparency in Markets Operated by Regional
Transmission Organizations and Independent System Operators.\37\ Among
other things, this proposed rule would require that ``each regional
transmission organization (RTO) and independent system operator (ISO)
that currently allocates the costs of real-time uplift due to
deviations should allocate such real-time uplift costs only to those
market participants whose transactions are reasonably expected to have
caused the real-time uplift costs.'' \38\ This NOPR establishes that
the goals of the price formation in the proceeding are to:
---------------------------------------------------------------------------
\37\ 158 FERC ] 61,047 Federal Energy Regulatory Commission, 18
CFR part 35 [Docket No. RM17-2-000] Uplift Cost Allocation and
Transparency in Markets Operated by Regional Transmission
Organizations and Independent System Operators (January 19, 2017).
\38\ Id. at 1.
---------------------------------------------------------------------------
(1) Maximize market surplus for consumers and suppliers;
(2) Provide correct incentives for market participants to follow
commitment and dispatch instructions, make efficient investments in
facilities and equipment, and maintain reliability;
[[Page 46945]]
(3) Provide transparency so that market participants understand how
prices reflect the actual marginal cost of serving load and the
operational constraints of reliably operating the system; and
(4) Ensure that all suppliers have an opportunity to recover their
costs.\39\
---------------------------------------------------------------------------
\39\ 158 FERC ] 61,047 Federal Energy Regulatory Commission, 18
CFR part 35 [Docket No. RM17-2-000] Uplift Cost Allocation and
Transparency in Markets Operated by Regional Transmission
Organizations and Independent System Operators (January 19, 2017) at
5, para 6.
---------------------------------------------------------------------------
Through these proceedings, the Commission has developed an
extensive record on price formation in the Commission approved ISOs and
RTOs. Nevertheless, the fundamental challenge of maintaining a
resilient electric grid has not been sufficiently addressed by the
Commission or the ISOs and RTOs. The continued loss of fuel-secure
generation must be stopped. These generation resources are necessary to
maintain the resiliency of the electric grid. FERC must adopt rules
requiring the Commission-approved ISOs and RTOs to reduce the chronic
distortion of the markets that is threatening the resilience of the
Nation's electricity system.
III. Proposal
In light of these threats to grid reliability and resilience, it is
the Commission's immediate responsibility to take action to ensure that
the reliability and resiliency attributes of generation with on-site
fuel supplies are fully valued and in particular to exercise its
authority to develop new market rules that will achieve this urgent
objective.
The recent Polar Vortex, as well as the devastation from Superstorm
Sandy and Hurricanes Harvey, Irma, and Maria, reinforces the urgency
that the Commission must act now. Moreover, the Commission should take
action before the winter heating season begins so as to prevent the
potential failure of the grid from the loss of fuel-secure generation--
as almost happened during the 2014 Polar Vortex.
As outlined, the Commission has developed a vast record of
comments, hearings, and technical conferences on price formation
matters, but has not done enough to address the crisis at hand.
Immediate action is necessary to ensure fair compensation in order to
stop the imminent loss of generators with on-site fuel supplies, and
thereby preserve the benefits of generation diversity and avoid the
severe consequences that additional shut-downs would have on the
electric grid.
Over the past few years, the Commission has been considering
various aspects of accurate price formation within Commission-approved
organized markets in its ongoing price formation docket. Throughout
these proceedings the Commission has declared that a key goal of price
formation is to ``ensure that all suppliers have an opportunity to
recover their costs.'' \40\ The Commission has conducted technical
conferences, sought and received significant stakeholder and public
input, and issued and approved several market rule changes to
accomplish these goals.
---------------------------------------------------------------------------
\40\ FERC's Price Formation in Energy and Ancillary Services
Markets Operated by Regional Transmission Organizations and
Independent System Operators; Docket No. AD14-14-000; Notice
Inviting Post-Technical Workshop Comments (January 16, 2015), Post-
Technical Conference Questions for Comment at 1.
---------------------------------------------------------------------------
Pursuant to the Secretary's authority under section 403 of the
Department of Energy Organization Act (42 U.S.C. 7173), the Secretary
is directing the Commission to exercise its authority under sections
205 and 206 of the Federal Power Act to issue a final rule requiring
its organized markets to develop and implement market rules that
accurately price generation resources necessary to maintain the
reliability and resiliency of our Nation's bulk power system.
The proposed rule allows for the recovery of costs of fuel-secure
generation units frequently relied upon to make our grid reliable and
resilient. Such resources provide reliable capacity, resilient
generation, frequency and voltage support, on-site fuel inventory--in
addition to providing power for our basic needs, quality of life, and
robust economy. The rule allows the full recovery of costs of certain
eligible units physically located within the Commission-approved
organized markets. Eligible units must also be able to provide
essential energy and ancillary reliability services and have a 90-day
fuel supply on site in the event of supply disruptions caused by
emergencies, extreme weather, or natural or man-made disasters. These
resources must be compliant with all applicable environmental
regulations and are not subject to cost-of-service rate regulation by
any State or local authority. The rule requires the organized markets
to establish just and reasonable rate tariffs for the recovery of costs
and a fair rate of return.
IV. Procedures for Completion of Final Action
A. Deadlines
Pursuant to section 403(b) of the DOE Act, the Secretary is
requiring the Commission to consider and take final action on the
proposed rule herein within 60 days from the date of the publication of
this NOPR in the Federal Register. As an alternative, the Secretary
urges the Commission to issue the rule proposed herein as an interim
final rule, effective immediately, with provision for later
modifications after consideration of public comments. The Secretary
further directs that any final rule adopting this proposal take effect
within 30 days of publication of such final rule in the Federal
Register.
B. Comment Procedures
To ensure that the Commission completes final action on this
proposed rule within the deadline provided, it will be necessary to
provide for the solicitation and review of public comments prior to the
Commission's final action. To facilitate such comment process, the
Commission is invited to issue a notice providing for such process
within two business days of the publication of this proposed rule in
the Federal Register. If the Commission does not do so, the following
comment process will take effect:
Interested persons are invited to submit comments on the matters
and issues proposed in this NOPR to be adopted. Comments are due
November 24, 2017. Comments must refer to Commission Docket No. RM18-1-
000, and must include the commenter's name, the organization they
represent, if applicable, and their address in their comments.
It is encouraged that comments be filed electronically via the
eFiling link on the Commission's Web site at https://www.ferc.gov. The
Commission accepts most standard word processing formats. Documents
created electronically using word processing software should be filed
in native applications or print-to-PDF format and not in a scanned
format. Commenters filing electronically do not need to make a paper
filing.
Commenters that are not able to file comments electronically must
send an original of their comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
All comments will be placed in the Commission's public files and
may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to
[[Page 46946]]
serve copies of their comments on other commenters.
C. Compliance Filings
The Secretary further proposes that any final rule issued by the
Commission pursuant to this NOPR shall provide that each Commission-
approved RTO and ISO shall submit a compliance filing, including a
revised tariff pursuant to section 205 of the Federal Power Act, within
15 days of the effective date of the final rule to demonstrate that it
meets the proposed requirements set forth in any Final Rule. This
compliance deadline is for each RTO and ISO to submit proposed tariff
changes or otherwise demonstrate compliance with any Final Rule.
Implementing the reforms required by any Final Rule in this proceeding
may be a complex endeavor. However, implementation of these reforms is
important to ensure rates remain just and reasonable. Therefore, it is
proposed that tariff changes filed in response to a Final Rule in this
proceeding must become effective no more than 15 days after compliance
filings are due.
To the extent that any RTO or ISO believes that it already complies
with the reforms proposed in this NOPR, the RTO or ISO would be
required to demonstrate how it complies in the compliance filing
required 15 days after the effective date of any Final Rule in this
proceeding. To the extent that any RTO or ISO seeks to argue on
compliance that its existing market rules are consistent with or
superior to the reforms adopted in any Final Rule, the Commission has
the ability entertain such arguments at that time.\41\
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\41\ See, e.g., Order No. 825, FERC Stats. & Regs. ] 31,384 at P
72; Demand Response Compensation in Organized Wholesale Energy
Markets, Order No. 745, FERC Stats. & Regs. ] 31,322, at P 4 & n.7,
order on reh'g and clarification, Order No. 745-A, 137 FERC ] 61,215
(2011), reh'g denied, Order No. 745-B, 138 FERC ] 61,148 (2012),
vacated sub nom. Elec. Power Supply Ass'n v. FERC, 753 F.3d 216
(D.C. Cir. 2014), rev'd & remanded sub nom. FERC v. Elec. Power
Supply Ass'n, 136 S. Ct. 760 (2016).
---------------------------------------------------------------------------
V. Statutory and Regulatory Review
Section 403(a) of the DOE Act authorizes the Secretary of Energy to
propose rules with respect to any function within the jurisdiction of
the Commission. Section 403(b) of that Act provides that the Commission
shall have exclusive jurisdiction over such proposals. Accordingly,
although the proposal is that of the Secretary of Energy, the
Commission is the agency which will take final action on this proposed
rulemaking. Therefore, the Commission is the appropriate agency to
comply with the statutory, regulatory or Executive Order requirements
which arise in connection with this rulemaking. To the extent a
statute, regulation, or Executive Order requires action before the
issuance of a final rule, the Commission should take such action in
sufficient time to permit adoption of a final rule within the deadline
for final action set forth above.
To the extent that a NOPR--in the event the Commission were to
issue one--would include certain information, included below are the
following:
VI. Information Collection Statement
The Paperwork Reduction Act (PRA) \42\ requires each federal agency
to seek and obtain Office of Management and Budget (OMB) approval
before undertaking a collection of information directed to ten or more
persons or contained in a rule of general applicability. OMB
regulations \43\ require approval of certain information collection
requirements imposed by agency rules. Upon approval of a collection of
information, OMB will assign an OMB control number and an expiration
date. Respondents subject to the filing requirements of an agency rule
will not be penalized for failing to respond to the collection of
information unless the collection of information displays a valid OMB
control number.
---------------------------------------------------------------------------
\42\ 44 U.S.C. 3507(d).
\43\ 5 CFR 1320.
---------------------------------------------------------------------------
Similar to other recently issued rules in its price formation
docket, the reforms proposed in this NOPR would amend the Commission's
regulations to improve the operation of organized wholesale electric
power markets operated by RTOs and ISOs. The reforms proposed in this
NOPR would require each RTO and ISO to implement market rules that meet
certain requirements for pricing resiliency resources. The reforms
proposed in this NOPR would require one-time filings of tariffs with
the Commission and potential software upgrades to implement the reforms
proposed in this NOPR. DOE anticipates the reforms proposed in this
NOPR, once implemented, would not significantly change currently
existing burdens on an ongoing basis. With regard to those RTOs and
ISOs that believe that they already comply with the reforms proposed in
this NOPR, they could demonstrate their compliance in the compliance
filing required 15 days after the effective date of any Final Rule in
this proceeding. The Commission will submit the proposed reporting
requirements to OMB for its review and approval under section 3507(d)
of the Paperwork Reduction Act.\44\
---------------------------------------------------------------------------
\44\ 44 U.S.C. 3507(d) (2012).
---------------------------------------------------------------------------
While the DOE expects the adoption of the reforms proposed in this
NOPR to provide significant benefits, the DOE understands
implementation can be a complex endeavor. Comments are sought on the
accuracy of provided burden and cost estimates and any suggested
methods for minimizing the respondents' burdens, including the use of
automated information techniques. Specifically, detailed comments are
sought on the potential cost and time necessary to implement aspects of
the reforms proposed in this NOPR, including (1) hardware, software,
and business processes changes; and (2) processes for RTOs/ISOs to vet
proposed changes amongst their stakeholders.
Burden Estimate: \45\ The DOE believes that the burden estimates
below are representative of the average burden on respondents,
including necessary communications with stakeholders. The estimated
burden and cost for the requirements contained in this NOPR follow.\46\
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\45\ Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, disclose, or
provide information to or for a federal agency, including: ``. . .
(ii) Developing, acquiring, installing, and utilizing technology and
systems for the purpose of collecting, validating, and verifying
information; (iii) Developing, acquiring, installing, and utilizing
technology and systems for the purpose of processing and maintaining
information; (iv) Developing, acquiring, installing, and utilizing
technology and systems for the purpose of disclosing and providing
information . . . .'' 5 CFR 1320.3(b)(1) (2016). The time, effort,
and financial resources necessary to comply with a collection of
information that would be incurred by persons in the normal course
of their activities (e.g., in compiling and maintaining business
records) will be excluded from the ``burden'' if the agency
demonstrates that the reporting, recordkeeping, or disclosure
activities needed to comply are usual and customary.
\46\ This estimate is based on the Commission's estimate used by
the Commission in 157 FERC ] 61,213, 18 CFR part 35 [Docket No.
RM18-1-000] Fast-Start Pricing in Markets Operated by Regional
Transmission Organizations and Independent System Operators
(December 15, 2016)]. For this information collection, the
Commission staff estimates that industry is similarly situated in
terms of hourly cost (wages plus benefits). Based on the
Commission's average cost (wages plus benefits) for 2016, the
Commission is using $74.50/hour.
[[Page 46947]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual number Total annual burden Cost per
Number of of responses Total number Average burden hours and hours and total annual respondent
respondents per respondent of responses cost per response cost ($)
(1) (2) (1) * (2) = (4)..................... (3) * (4) = (5)........ (5) / (1)
(3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tariff filing costs.................. 6 1 6 80 hours, $5,920........ 480 hours, $35,520..... ..............
Implementation costs................. 6 1 6 3,853 hours, $285,122... 23,118 hours, ..............
$1,710,732.
------------------------------------------------------------------------------------------------------------------
Total (one-time in Year 1)....... .............. .............. .............. 3,933 hours, $291,042... 23,598 hours, 291,042
$1,746,252.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost to Comply: The DOE has projected the total cost of compliance,
all within six months of a Final Rule plus initial implementation, to
be $1,746,252. After Year 1, the reforms proposed in this NOPR, once
implemented, would not significantly change existing burdens on an
ongoing basis.
Title: PRA approval for this collection of information will be
obtained by FERC.
Action: Proposed revisions to an information collection.
OMB Control No.: [TBD].
Respondents for this Rulemaking: RTOs and ISOs.
Frequency of Information: One-time during year one.
Necessity of Information: The DOE proposes this rule to improve
competitive wholesale electric markets in the RTO and ISO regions.
Internal Review: The DOE has reviewed the proposed changes and has
determined that the changes are necessary. These requirements conform
to the Commission's need for efficient information collection,
communication, and management within the energy industry. This estimate
is based on the Commission's estimate in the NOPR for ``Fast-Start
Pricing in Markets Operated by Regional Transmission Organizations and
Independent System Operators'' \47\ and DOE believes that the NOPR is
similar and would impose similar burden associated with the information
collection requirements.
---------------------------------------------------------------------------
\47\ 157 FERC ] 61,213, 18 CFR part 35 [Docket No. RM18-1-000],
Fast-Start Pricing in Markets Operated by Regional Transmission
Organizations and Independent System Operators (December 15, 2016).
---------------------------------------------------------------------------
Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street NE., Washington, DC 20426, Attention:
Office of the Executive Director, email: DataClearance@ferc.gov, Phone:
(202) 502-6608, fax: (202) 273-0873. Comments on the collection of
information and the associated burden estimate in the proposed rule
should be sent to the Commission in this docket and may also be sent to
the Office of Information and Regulatory Affairs, Office of Management
and Budget, 725 17th Street NW., Washington, DC 20503 [Attention: Desk
Officer for the Federal Energy Regulatory Commission], at the following
email address: oira_submission@omb.eop.gov. Please refer to Docket No.:
RM18-1-000 in your submission.
VII. Environmental Analysis
Though the Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment,\48\ the
Commission has previously concluded \49\ that neither an Environmental
Assessment nor an Environmental Impact Statement is required for a NOPR
under section 380.4(a)(15) of the Commission's regulations, which
provides a categorical exemption for approval of actions under sections
205 and 206 of the FPA relating to the filing of schedules containing
all rates and charges for the transmission or sale of electric energy
subject to the Commission's jurisdiction, plus the classification,
practices, contracts and regulations that affect rates, charges,
classifications, and services.\50\ This NOPR would require an exercise
of the Commission's authority under sections 205 and 206 of the FPA.
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\48\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
\49\ 157 FERC ] 61,213, 18 CFR part 35 [Docket No. RM18-1-000]
Fast-Start Pricing in Markets Operated by Regional Transmission
Organizations and Independent System Operators (December 15, 2016)]
at para. 73.
\50\ 18 CFR 380.4(a)(15).
---------------------------------------------------------------------------
VIII. Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (RFA) \51\ generally
requires a description and analysis of proposed rules that will have
significant economic impact on a substantial number of small entities.
The RFA does not mandate any particular outcome in a rulemaking. It
only requires consideration of alternatives that are less burdensome to
small entities and an agency explanation of why alternatives were
rejected. The Small Business Administration's (SBA) Office of Size
Standards develops the numerical definition of a small business.\52\
These standards are provided on the SBA Web site.\53\
---------------------------------------------------------------------------
\51\ 5 U.S.C. 601-12.
\52\ 13 CFR 121.101.
\53\ U.S. Small Business Administration, Table of Small Business
Size Standards Matched to North American Industry Classification
System Codes (effective Feb. 26, 2016), https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.
---------------------------------------------------------------------------
The SBA classifies an entity as an electric utility if it is
primarily engaged in the transmission, generation and/or distribution
of electric energy for sale. Under this definition, the six RTOs/ISOs
are considered electric utilities, specifically focused on electric
bulk power and control. The size criterion for a small electric utility
is 500 or fewer employees.\54\ Since every RTO/ISO has more than 500
employees, none are considered small entities. Furthermore, because of
their pivotal roles in wholesale electric power markets in their
regions, none of the RTOs/ISOs meet the last criterion of the two-part
RFA definition of a small entity: ``not dominant in its field of
operation.'' \55\ As a result, we certify that the reforms required by
this NOPR would not have a significant economic impact on a substantial
number of small entities.
---------------------------------------------------------------------------
\54\ 13 CFR 121.201 (Sector 22, Utilities).
\55\ The RFA definition of ``small entity'' refers to the
definition provided in the Small Business Act, which defines a
``small business concern'' as a business that is independently owned
and operated and that is not dominant in its field of operation. The
Small Business Administration's regulations at 13 CFR 121.201 define
the threshold for a small Electric Bulk Power Transmission and
Control entity (NAICS code 221121) to be 500 employees. See 5 U.S.C.
601(3) (citing to section 3 of the Small Business Act, 15 U.S.C.
632).
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IX. Executive Order 12866
This proposed rule has been determined not to be a significant
regulatory action for purposes of
[[Page 46948]]
Executive Order 12866. As a result this rule was not reviewed by the
Office of Management and Budget.
X. Document Availability
In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through the Commission's Home Page (https://www.ferc.gov) and
in the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A,
Washington, DC 20426.
From the Commission's Home Page on the Internet, this information
is available on eLibrary. The full text of this document is available
on eLibrary in PDF and Microsoft Word format for viewing, printing,
and/or downloading. To access this document in eLibrary, type the
docket number excluding the last three digits of this document in the
docket number field.
83. User assistance is available for eLibrary and the Commission's
Web site during normal business hours from the Commission's Online
Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at
public.referenceroom@ferc.gov.
XI. Approval of the Office of the Secretary
The Secretary of Energy has approved the publication of this
proposed rule.
List of Subjects in 10 CFR Part 35
Electric power rates, electric utilities, reporting and
recordkeeping requirements.
Issued in Washington, DC, on September 29, 2017.
Rick Perry,
Secretary of Energy.
For the reasons stated in the preamble, DOE proposes that FERC
amend part 35, chapter I of title 18, subchapter B, Code of Federal
Regulations as set forth below:
PART 35--FILING OF RATE SCHEDULES AND TARIFFS
0
1. The authority citation for part 35 continues to read as follows:
Authority: 16 U.S.C. 791a-825r; 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.
0
2. Section 35.28 is amended by adding paragraph (g)(10) to read as
follows:
Sec. 35.28 Non-discriminatory open access transmission tariff.
* * * * *
(g) * * *
(10) Pricing eligible grid reliability and resiliency resources.
(i) Definition of eligible grid reliability and resiliency
resources. An eligible grid reliability and resiliency resource is any
resource that:
(A) Is an electric generation resource physically located within a
Commission-approved independent system operator or regional
transmission organization;
(B) Is able to provide essential energy and ancillary reliability
services, including but not limited to voltage support, frequency
services, operating reserves, and reactive power;
(C) Has a 90-day fuel supply on site enabling it to operate during
an emergency, extreme weather conditions, or a natural or man-made
disaster;
(D) Is compliant with all applicable federal, state, and local
environmental laws, rules, and regulations; and
(E) Is not subject to cost of service rate regulation by any state
or local regulatory authority.
(ii) Scope of application. The requirements of this rule shall
apply to Commission-approved independent system operators or regional
transmission organizations with energy and capacity markets and a
tariff that contains a day-ahead and a real-time market or the
functional equivalent. The application of this rule must be consistent
between the day-ahead and real-time markets.
(iii) Reliability and resiliency rate. (A) Each Commission-approved
independent system operator or regional transmission organization shall
establish a tariff that provides a just and reasonable rate for the--
(1) Purchase of electric energy from an eligible reliability and
resiliency resource; and
(2) recovery of costs and a return on equity for such resource
dispatched during grid operations.
(B) The just and reasonable rate shall include pricing to ensure
that each eligible resource is fully compensated for the benefits and
services it provides to grid operations, including reliability,
resiliency and on-site fuel-assurance, and that each eligible resource
recovers its fully allocated costs and a fair return on equity.
(iv) Reliability and resiliency costs. Compensable costs shall
include, but not be limited to, operating and fuel expenses, costs of
capital and debt, and a fair return on equity and investment.
[FR Doc. 2017-21396 Filed 10-6-17; 8:45 am]
BILLING CODE 6717-01-P