An Independent Agency?
Robin Lunt is an attorney (Of Counsel) at Wilkinson Barker Knauer LLP. Prior to joining WBK, Robin worked as the general counsel of a venture backed energy technology company. She was previously legal and policy advisor to WBK’s Tony Clark when he served as a commissioner at FERC. She also served as the assistant general counsel to the National Association of Regulatory Utility Commissioners.
Secretary Rick Perry's September 28, 2017 exercise of the relatively obscure authority under Department of Energy Organization Act (DOE Act) Section 403 that allows the Secretary of Energy to propose rules within the Federal Energy Regulatory Commission's jurisdiction roiled the energy world.
The DOE proposal, in essence, directs FERC's organized markets to establish tariffs for the recovery of costs and a fair rate of return for generating units that have a ninety-day fuel supply on site and that are not subject to cost-of-service rate regulation by any state or local authority.
The DOE Act leaves to the Commission the exclusive jurisdiction to consider and take final action on any proposal made by the Secretary. Since the DOE proposal does not attempt to address any of the details requisite to a final rule, it leaves much work in the hands of the Commission.
Taken on its face, DOE's proposed cost-of-service approach to compensating specific solid fuel resources is an around-market solution from within a FERC-administered market, aimed at supporting merchant coal and nuclear units.
While the introduction of cost-of-service regulation horrifies market purists, the vague nature of the DOE proposal does not guarantee that FERC will take a cost-of-service approach, nor are cost-of-service payments unheard of in FERC administrative markets.