FERC Terminates DOE’s Proposed Grid Resilience Pricing Rule; Initiates New Proceeding to Further Examine Resilience Issues

Yesterday, FERC issued an order terminating the DOE -proposed grid resilience and reliability pricing rulemaking and initiating a new proceeding to take additional steps to evaluate the resilience of the bulk power system in regions operated by ISOs and RTOs, Grid Resilience in Regional Transmission Organizations and Independent System Operators, FERC Docket No. AD18-7.  The order emphasizes FERC’s commitment to prioritizing resilience and reliability issues especially within a market-driven regulatory structure, stating that “[t]he Commission’s endorsement of markets does not conflict with its oversight of reliability, and the Commission has been able to focus on both without compromising its commitment to either.”

Addressing its decision to terminate the DOE Proposed Rule proceeding, the Commission explains that in order to implement the changes identified in DOE’s proposal, Federal Power Act Section 206 requires it to find that the existing RTO/ISO tariffs are unjust, unreasonable, unduly discriminatory, or preferential.  But after examining the proposed rule and over 1,500 comment submissions from interested parties, it has concluded that “[n]either the Proposed Rule nor the record in this proceeding has satisfied th[is] threshold statutory requirement.”  The Commission further states:

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 tariffs.  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.

However, the Commission also makes clear that in its view the resilience of the bulk power system remains an important issue, and that a new proceeding is necessary to:

  1. Develop a common understanding among the Commission, industry, and others of what resilience of the bulk power system means and requires;
  2. Understand how each RTO/ISO assesses resilience in its geographic footprint; and
  3. Evaluate whether additional Commission action regarding resilience is appropriate at this time.

The Order directs each jurisdictional RTO/ISO (not limited to entities with centralized capacity markets as the terminated docket seemed to be) to submit comments by March 9, 2018, on the above topics to help FERC determine whether it should take additional action to strengthen the resilience and reliability of the nation’s bulk power system.  Parties interested in submitting reply comments to the RTO/ISO comments must do so by April 1, 2018.

Commissioners LaFleur, Chatterjee, and Glick filed separate concurring statements.

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