Tuesday, October 17, 2017
October 17, 2017
Federal Energy Regulatory Commission
Secretary of the Commission
888 First Street, NE
Washington, DC 20426
Re: Grid Resiliency Pricing Rule
FERC Docket No. RM18-1-000
COMMENTS OF THE INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL UNION 29 IN SUPPORT OF THE PROPOSED RESILIENCY RULE
On September 28, 2017, the Department of Energy (“DOE”) issued the “Grid Resiliency Pricing Rule” (the “Proposal”) directing the Federal Energy Regulatory Commission (“FERC”) to adopt a rule requiring operators of organized markets to “ensure that certain reliability and resiliency attributes of electric generation sources are fully valued.” Such a rule, as contemplated by the regulatory language of the Proposal, will ensure that existing nuclear and coal-fired electric generating stations in Pennsylvania will be compensated appropriately and fully for their costs of operation and will avoid premature retirement. Adoption of that rule will thus sustain the long-term viability of critical power plants, preserve and create jobs, maintain electric reliability, and provide substantial economic benefits to the many hard-working Americans living throughout the region.
IBEW Local 29 strongly supports the Proposal and shares the Secretary’s urgency that FERC act promptly to direct operators of organized markets to issue the requested rule. FERC has the ability to act, and must act, without undue delay to avoid premature closure of crucial power plants and our members’ loss of critical economic and reliability benefits. FERC has thoroughly examined how electric markets function and how those markets affect the continued operation of crucial power plants needed for reliability for some time. FERC has the requisite basis to act now. There is no time for delay. In addition to acting promptly, FERC should also direct organized market operators to issue a comprehensive and enduring set of rules, based on the regulatory language of the Proposal, for the proper compensation of critical power plants. Protracted proceedings undertaken by organized market operators that fail to develop fair, compensatory and transparent rules will only engender market uncertainty and delay in providing sufficient compensation to these facilities, thereby jeopardizing the operation of the very plants that the DOE seeks to maintain in operation.
All communications, correspondence, and documents related to this proceeding should be directed to the following person:
IBEW Local 29
986 Greentree Road, Pittsburgh, PA 15220
II. DESCRIPTION OF IBEW LOCAL 29
IBEW Local 29 is a progressive labor organization that represents individuals in the Utility, and Generation industries.
III. DESCRIPTION OF IBEW LOCAL 29’S INTEREST IN PROCEEDING
IBEW Local 29 is a party to collective bargaining agreements with the owners of baseload coal and nuclear power plants located in Pennsylvania. As a result, the wages, terms, and conditions of employment of its members may be directly affected by the actions taken by the FERC and operators of organized markets in this proceeding. Thus, IBEW Local 29 members have a direct and substantial interest in this proceeding. As well, the unique perspective of IBEW Local 29 and its members will only serve to enhance the record in this proceeding.
The communities where struggling baseload coal and nuclear power plants are located are dependent on the jobs and economic development opportunities the power plants provide. The recent decline in Pennsylvania’s electric power industry, for example, has led to reductions in operations and capital improvement expenditures at numerous power production and manufacturing facilities across Pennsylvania. This has led to extreme hardship for the thousands of union workers employed in this industry as well as their families.
It is imperative that baseload coal and nuclear plants continue to operate in light of these dire circumstances. Baseload coal and nuclear plants in Pennsylvania provide thousands of MWs of reliable power and provide union jobs and economic opportunities to IBEW Local 29 members. The Beaver Valley, Cheswick, and Brunot Island generation stations directly employ approximately 500 IBEW Local 29 members, and the maintenance and capital improvement work on these plants supports the local economy by creating thousands of well-paying union jobs for contractors. In addition, these plants contribute millions each year in state and local tax revenues that support local schools, police and fire departments and other vital public services. The loss of jobs, tax revenue, and the ripple effect of such losses throughout the local economy, will have a severely detrimental impact on the region.
The issuance of a rule preserving the continued operation of resilient baseload coal and nuclear power plants will maintain a reliable supply of electricity for the region’s energy-intensive economy in two ways. First, the preservation of certain plants will avoid the need to replace lost generation with imports and the associated construction of infrastructure to facilitate such importation. Preserving baseload coal and nuclear power plants will keep these needed, reliable facilities running close to home without the need to depend on distant resources, particularly during catastrophic events like severe storms, to fulfill our region’s dynamic need for reliable electricity.
Second, premature plant closures will deplete the stable of highly skilled (and specifically trained and experienced) employees, many of whom have lived in the region for several years and who take great pride in their work. With a depletion of this skilled and experienced group of workers, and the possible replacement of these workers with more distant and perhaps less-skilled individuals, we will see a direct and adverse impact on our ability to maintain the generation facilities that continue to operate and, as important, our ability to respond promptly to severe contingencies affecting the operation of these remaining plants in operation. In short, allowing baseload coal and nuclear power plants to close prematurely will have an adverse impact on the reliability of the region’s electricity supply and on the reliable operation of the regional electricity system.
Rates for the sale of electricity that are inadequate to sustain the operation of baseload generation facilities that provide reliability and resiliency support cannot be considered to be just and reasonable. Because of the loss of jobs, the significant reduction in payments to local governments, and the decline in electricity resource and grid reliability that would result from deactivation of the nuclear and coal-fired generating facilities in Ohio, it is essential that the FERC adopt a rule, such as that proposed by DOE, which will ensure that such generating facilities are fully compensated for their costs and will remain in operation.
In order to mitigate the risk that such generating units may be deactivated prematurely, IBEW Local 29 strongly urges FERC to adopt the rule proposed by the DOE as promptly and comprehensively as possible. FERC has a sufficient record to act that will be further bolstered by the comments considered in this proceeding. FERC has thoroughly considered the impact of electric markets on the sustained operation of at-risk power plants and, as noted by the Secretary of the DOE, the time to act is now given the severe impacts to system reliability and resilience, and national security, attendant to the premature closure of crucial power plants. Any protracted delay in creating fully compensatory market rules will only exacerbate the problem of pre-mature closures.
In acting promptly, FERC should also direct the organized market operators to issue a rule that is not only compensatory (and based on the regulatory language of the Proposal) but comprehensive and enduring. The rules to be issued by operators of organized markets should be fair and transparent and should ensure that critical power plants can continue to operate for the long-term and without the prospect of repeated re-examination and adjustment to their market compensation. The uncertainty that less than comprehensive and enduring market rules will engender will defeat the very purpose of preserving the extended operation of these much-needed power plants.
IBEW Local 29