Clean Energy Groups Seek Rehearing on DOE Resource Adequacy Report

Former Kentucky Public Service Commission Chair Kent Chandler said the report relies on one scenario with limited supply growth to push the argument for no retirements. While that could offer evidence of how the industry and its regulators are falling short, it is not enough, he said. 

“It is certainly not, in my opinion, sort of my former regulator hat, useful for the singular purpose of saying all power plants need to stay on at all cost, or build all new power plants at all costs,” Chandler, now a senior fellow with R Street, said in an interview. 

Most studies assessing future resource adequacy would use various scenarios and rank the probabilities of occurring, but by its own admission DOE’s report does not do that, Chandler said. 

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Chandler said Kentucky, a coal-friendly state, established a board to review all proposed plant retirements and make recommendations to the PSC regarding approval. He noted the board recently made no filing after a co-op asked to retire a small, broken combustion turbine plant that would have cost more to repair than build new. 

“This body, who basically was put together for the purpose of keeping thermal fossil fuel-fired generation from retiring, was like, ‘We take no position on the retirement either way,’” Chandler said. “They were never going to be for it, but they just couldn’t come up with a reason to say, ‘Yeah, let’s keep it on.’” 

“So, that’s a long way of saying even those folks that are super interested in resource adequacy, or have a bias towards legacy, fossil fuel-fired generation — there are going to be many instances where it just does not make any sense at all for reliability or economic purposes to try to keep some of these plants on way past their economic life,” he said. 

That decision might have been different with a larger 650-MW power plant, which would be a major resource to take offline in one area, he added. 

DOE historically has used Section 202 (c) for limited circumstances when the grid is stressed and a power plant is running up against emissions limits from environmental rules, ensuring it will not be fined for exceeding air permits to maintain reliability — including this summer. 

Chandler said one way to take the politics out of the retirement issue would be broadening how RTOs and ISOs employ reliability must-run (RMR) contracts. While most grid operators use RMRs as a stopgap to prevent grid problems as they address the consequences of removing a retiring plant from the system, ERCOT is one market that relies on the tool for resource adequacy after making a clear case, he said.  

Chandler thinks Congress — or possibly FERC — could change rules to allow RTOs/ISOs to review the impact of retirements on resource adequacy and offer RMRs when needed.