Nuclear Plant Journal, September-October 2015 NuclearPlantJournal.com
21
be the RTOs supported by market
participants who need to fix these market
design flaws.
FERC has convened several
technical conferences over the last year
to specifically address the energy price
formation issue, and we are hopeful
that FERC is about to take some form
of action that will require the RTOs to
address these concerns. Additionally
while there are some relatively easy fixes
that will be marginally beneficial, it’s the
structural changes to the way prices are
calculated in the Day Ahead markets that
will be of the most benefit to the baseload
units.
4.
Does the FERC have any deadline to
come up with a solution?
No, FERC is not under any hard
deadline to take any action however
numerous industry groups as well as
senior executives from several utilities
and merchant generators have met with
the FERC Commissioners and their staff
in an attempt to make sure that the FERC
understands the urgency of the situation.
We understand that these are going to be
difficult and sometimes complex changes
and it’s going to take time and resources
to get it done.
5.
What are the efforts by FERC, ISO
and RTOs to fix the disparity?
When I talk about disparity, I am
referring to the way some states, primarily
through their Public Policy initiatives,
are picking winners and losers based on
technology and as a result are not letting
the markets operate efficiently. In the
long run this is going to hurt consumers
in the form of higher rates.
These states do not necessarily
recognize and accept the fact that
existing nuclear units can provide many
of the same attributes that the States
are trying to incentivize. For example,
several New England states are moving
forward to procure clean energy through
an RFP process. Our understanding is
that existing nuclear plants will not be
able to participate in that procurement
process even though nuclear plants can
provide the same clean energy, cheaper
and on a scale that other technologies
cannot reasonably expect to achieve. In
fact in 2014, the Pilgrim nuclear plant
produced 84% of all of the emission free
energy produced in the entire state of
Massachusetts.
On the positive side, we have had
preliminary discussions with several
Northeast states, on the concept of
adopting what is often referred to as
a Clean Energy Standard. Under this
program, a state would define what
specific attributes they wanted to acquire
such as emission free energy, perhaps
fuel diversification, capacity factor
requirements etc. Once the attributes
were adequately defined, a competitive
procurement process would be used
that would allow all market participants
the opportunity to provide the desired
attributes. The very clear benefit here is
that the process would rely on competition
to ensure that ratepayers received the best
price available for the attributes desired.
This program would run in parallel
with the energy and capacity markets
administered by the RTOs.
One of the other significant
challenges to nuclear plants operating in
