By Jason Fordney

RENO, Nev. — If she had her way, the principal author of the Department of Energy’s August grid study would have written its recommendations a bit differently. And she wouldn’t have attempted to use it as a pretext for price supports for struggling coal and nuclear plants, she said last week.

Alison Silverstein, an independent consultant and former adviser to FERC Chairman Pat Wood III, gave a presentation last week at a joint meeting of the Committee on Regional Electric Power Cooperation and the Western Interconnection Regional Advisory Board, recommending the protection of wholesale markets and not particular technologies.

She argued that coal units are not good for grid “resilience” and contested their inclusion among so-called “baseload” plants.

“Coal plants that retired recently did not operate as baseload,” she said. “Retired plants were smaller, older, had higher heat rates, and therefore were dispatched less often and ran at lower capacity factors.”

The department’s Notice of Proposed Rulemaking to FERC would require RTOs with both energy and capacity markets to compensate generators their full operating costs if they maintain a 90-day supply of on-site fuel.

Silverstein said that most coal plants have on-site inventories of 45 to 70 days, not 90 days as sometimes cited by coal interests.

She recommended that grid planners “identify, define, productize and compensate essential reliability and resilience services to meet multi-hazard threats and scenarios.” She said that “every essential service should be compensated,” but not all should receive market-based compensation, and “some should be conditions of interconnections with value-based compensation.”

She also recommended that renewables and demand response be used for frequency response because they are better at providing those services than conventional generation, if they receive proper incentives.

While the department’s study recommended that FERC consider action similar to the NOPR, the technical portions, of which Silverstein wrote the initial draft, contained little new information or data, citing trends familiar to observers of the markets. Many stakeholders, particularly those in renewable energy, feared that the department would attempt to manipulate the data to support its recommendations. (See Perry Grid Study Seeks to Aid Coal, Nuclear Generation.)

Their fears were heightened by the involvement in the study of Travis Fisher, a former FERC economist hired by DOE in January who had written a 2015 report for the conservative Institute for Energy Research that alleged the “single greatest threat to reliable electricity in the U.S. does not come from natural disturbances or human attacks” but federal and state government policies such as renewable subsidies and mandates.

DOE’s ‘Deregulatory Push’

Fisher was also at the conference. He said DOE will soon issue a report on its “deregulatory push” following President Trump’s executive order on reducing regulations. The department is focused on technology and cybersecurity, the latter of which is “a huge issue and a top priority” for Secretary Rick Perry, he said.

He said that the industry needs to work more closely with government, and noted that discussions at the conference had focused on better computer modeling. DOE is doing a lot of work in that area, and “we actually are here to help,” he said.

‘Exciting Things’

The meeting also featured a panel on contracting led by Harry Singh, a vice president at Goldman Sachs and chairman of Western Systems Power Pool. What is driving many financial players in the West is “sustainability and renewables” through renewable policies in states such as California, he said.

“Two very exciting things in the West” are the Western Energy Imbalance Market (EIM) and SPP’s move to integrate Mountain West Transmission Group, Singh said. (See SPP, Mountain West Integration Work Goes Public.) Renewable power purchase agreements have expanded in SPP and Texas because of the wind resources there, he said. Singh discussed the impacts of contracting on reliability and other issues surrounding procurement in the West.

California Public Utilities President Michael Picker discussed issues in the state’s electricity planning, and said that by 2022, up to 83% of California load could be served by third-party providers as customers depart for competitive suppliers, community choice aggregators and other programs.

“Essentially, we are seeing deregulation from the bottom up,” Picker said, adding that customer disaggregation is occurring in a number of different forums, “with not necessarily a strategy in mind.” He added that he that “we will have a variety of challenges and “these are things that everybody is going to have to deal with as they see their load disaggregate.”

The commission established a team to follow up on comments gathered from its “Consumer and Retail Choice, the Role of the Utility, and an Evolving Regulatory Framework” report issued in May.