Independent regulators have rejected a proposal from the U.S. Energy Secretary that would bolster baseload power generators — including Lake County’s Perry Nuclear Power Plant — but initiated a new proceeding to “holistically examine the resilience of the bulk power system.”
In late September Energy Secretary Rick Perry asked the Federal Energy Regulatory Commission to adopt rules raising payments to power plants that keep a 90-day supply of fuel onsite — essentially coal and nuclear plants.
FERC was originally supposed to rule on the proposal in December, but two new commissioners, including the new chairman, were sworn in just days before the Dec. 11 deadline. The new chairman asked for an extension, which was granted.
In his September letter to FERC, Perry said “America’s greatness depends on a reliable, resilient electric grid powered by an ‘all of the above’ mix of generation sources.”
He added the electric gird’s resiliency is “being threatened by premature retirement of these fuel-secure baseload (coal and nuclear) resources.”
“While some commenters allege grid resilience or reliability issues due to potential retirements of particular resources we find that these assertions do not demonstrate the unjustness or unreasonableness of the existing RTO/ISO (regional transmission organization/independent system operator) tariffs,” FERC wrote in its Jan. 8 decision. “In addition, the extensive comments submitted by the RTOs/ISOs do not point to any past or planned generator retirements that may be a threat to grid resilience.”
In its decision, FERC moved the issued back down to regional energy markets. The commission directed the operators of the regional wholesale power markets to “provide information as to whether FERC and the markets need to take additional action on resilience of the bulk power system.”
“The goals of this proceeding are to develop a common understanding among the Commission, industry and others of what resilience of the bulk power system means and requires; to understand how each regional transmission organization and independent system operator assesses resilience in its geographic footprint; and to use this information to evaluate whether additional Commission action regarding resilience is appropriate,” the commission stated. “FERC expects to review the additional material promptly.”
The commission said each regional market operator must submit the required information within 60 days.
FERC’s decision has been closely watched by Lake County officials, especially those in the Perry area. The Perry Nuclear Power Plant employs more than 700 people and is a significant source of tax revenue, for Perry Schools in particular.
The Perry plant is one of two nuclear plants in Ohio, both of which are owned by FirstEnergy. The Akron-based company has said it is looking to exit the competitive energy generation business and could sell or close the plants.
In a statement following FERC’s decision, FirstEnergy said it will review the commission’s order and determine their next steps. The future of FirstEnergy’s competitive generating facilities remains challenges, the company stated.
“Baseload coal and nuclear plants have long played an invaluable role in a well-functioning electric grid, yet the markets do not adequately compensate these assets,” the company stated. “Without timely action, more of these facilities will close prematurely, jeopardizing the ability to provide clean, reliable and affordable power to customers while harming economies across the region.”
The Perry Nuclear Plant celebrated 30 years of commercial operation in November. The plant is currently licensed through 2026 and can apply for a 20-year extension to operate through 2046.
Lake County Commissioner Jerry Cirino along with another commissioner from Ottawa County and other officials had previously met with Perry and then-acting FERC Chairman Neil Chatterjee to discuss the proposal. Cirino said in a phone interview Jan. 9 that FERC’s decision is a delay, but it doesn’t shut the door on potential help for the plant.
Perry Schools Superintendent Jack Thompson said he was disappointed with FERC’s decision but remains optimistic something will be done to bolster the plants. The problem with the plants in Ohio is time is running out, he said and they don’t know if anything will be done in time to save them.
“As long as there’s some hope here, I’m going to remain optimistic,” Thompson said.
U.S. Rep. Dave Joyce, R-Bainbridge Township, said FERC’s decision does not change his concern for any negative impact on Lake County and his concern “the Perry Nuclear Plant might close or scale back significantly.”
Joyce echoed Thompson’s sentiments: “Now, the good news is the FERC is still going to continue to study this; the question is how much longer can Lake County wait if we are going to get bad news that potentially the largest taxpayer may close its doors?”
Several Lake County entities took a recent hit to their budgets after it was announced FirstEnergy’s public utilities property in Lake County was devalued by nearly $53 million. FirstEnergy’s public utilities property includes the coal power plant in Eastlake, which closed in 2015, in addition to the Perry plant.
Perry Schools saw the most significant loss of tax revenues from the devaluation at nearly $2.3 million. Among other entities, the Lake County Board of Developmental Disabilities loses $258,350, the Perry Fire District loses $334,681 and Eastlake loses $200,673.
If federal help doesn’t come, legislation has been proposed in the state legislature to subsidize its two nuclear plants. Cirino admits that too will be a tough road.
FirstEnergy announced in November 2016 it would be exiting the competitive generation business “due to sustained, unfavorable market conditions,” FirstEnergy spokeswoman Jennifer Young previously told the News-Herald.
“As part of that process, earlier this year FirstEnergy reduced the book value of our competitive generating plants — including Perry — to more accurately reflect their estimated fair value,” she said. “This adjustment, known as an impairment charge, accounts for current and projected market conditions that are driving down the value of these plants. The taxable value of the plants and equipment has been reduced as a result of the adjustment.”
Following FERC’s decision, Secretary Perry thanked the commission for addressing the proposal, which he said had initiated a national debate on the resiliency of the nation’s electric system.
“What is not debatable is that a diverse fuel supply, especially with onsite fuel capability, plays an essential role in providing Americans with reliable, resilient and affordable electricity, particularly in times of weather-related stress like we are seeing now,” Perry said.
His proposal was a controversial one. Critics have argued the plan would distort energy markets, propping up uneconomical plants, and raise prices for customers, especially in the Midwest and Northeast.
Previously
>> Federal, local officials stress county-wide economic impact Perry plant closure would have
>> FERC chairman asks for extension on decision that would impact Perry Nuclear Power Plant
>> Perry Nuclear Power Plant celebrates 30 years of commercial operation