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Advanced Energy Buyers Group Opposes FERC Grid Rule

Posted by Advanced Energy Economy on Oct 25, 2017


Advanced Energy Buyers Group Urges FERC to Reject
Dept. of Energy Proposed Grid Pricing Rule

Comments to Federal Energy Regulatory Commission from large energy users say proposal would drive up costs and jeopardize wholesale markets without material benefits to electricity system reliability and resilience

Washington, D.C., Wed., Oct. 25, 2017 – Today, the Advanced Energy Buyers Group highlighted comments the group submitted to the Federal Energy Regulatory Commission (FERC) urging against finalizing a Grid Resilience Pricing Rule proposed by the Department of Energy (DOE), saying the proposal would “undermine the competitive market environment … directly harming our businesses.” 

Last month, DOE issued a Notice of Proposed Rulemaking (NOPR) that would provide full cost recovery to “fuel secure” generators in FERC-jurisdictional wholesale markets. The proposal is predicated on what DOE describes as urgent threats to the reliability and resilience of the nation’s electric grid. FERC has authority to decide whether and how to proceed.

“As companies dependent upon the availability of electricity on a 24-hour basis, we support efforts to ensure access to reliable, resilient, and affordable electricity,” the Advanced Energy Buyers Group wrote in its comments to FERC. However, the companies warned, “a Grid Pricing Rule in line with DOE’s proposal would undermine the core functionality of wholesale markets, eroding competition and imposing burdensome out-of-market costs on consumers like our companies, without providing material improvements in reliability and resilience to the energy system.” 

The Advanced Energy Buyers Group cited initial cost estimates placing the price of DOE’s proposal at up to $11 billion annually. As major employers totaling over $1 trillion in revenue last year, the group pointed out, “[i]ncreased operating costs from higher electricity prices directly impact our businesses’ ability to grow and innovate.”

Even worse, the Advanced Energy Buyers Group argues, “the proposed justification for the NOPR—namely that a reliability or resilience ‘emergency’ must be addressed immediately—is at odds with factual analysis and evidence of the reliability and resilience of the current U.S. electric grid.” Based on “recent assessments of the reliability and resilience of the electric grid, current and planned efforts of grid operators to adjust to a changing resource mix, and the overwhelming evidence from recent major outage events,” the group discards DOE’s assessment that the electricity grid faces an urgent reliability or resilience crisis necessitating immediate Commission action.

Finally, to avoid unnecessary cost increases for end-use customers, the Advanced Energy Buyers Group advises, “[a]ny steps taken by the Commission to improve reliability and resilience must take into account the full range of solutions available, to avoid unduly favoring specific technologies or solutions and to ensure least-cost outcomes.”

“The Advanced Energy Buyers Group and other large consumers pay a huge price when the grid fails, so they understand the importance of prudent investments to address threats to reliability and resilience,” said Malcolm Woolf, senior vice president for policy for Advanced Energy Economy (AEE), a national business organization that facilitates the Advanced Energy Buyers Group. “But they also pay the price of electricity cost increases, and in this case the balance is way off. DOE’s proposal would increase costs and distort wholesale markets in response to a reliability and resilience emergency that does not exist.” 

Additional Background

  • Refer to FERC Docket RM18-1-000 (access via AEE’s PowerSuite tool)
  • AEE filed comments with broad range of energy groups representing oil, natural gas, renewables, energy storage and other technologies.
  • AEE filed additional comments with advanced energy trades groups.
  • AEE backgrounder on the DOE proposed FERC rule is here.

About the Advanced Energy Buyers Group
The Advanced Energy Buyers Group is a business-led coalition of large energy users engaging on policies to expand opportunities to procure energy that is secure, clean, and affordable. Members of the Advanced Energy Buyers Group are leading companies and organizations spanning a range of market sectors, including technology, retail, education, and manufacturing. AE Buyers Group members share a common interest in expanding their use of advanced energy, with the goal of becoming more competitive, resilient, and sustainable enterprises far into the future. The Advanced Energy Buyers Group is convened and facilitated by Advanced Energy Economy (AEE), a national business association of advanced energy companies.

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