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ARTICLE · 11 OCTOBER 2017

DOE Directs FERC To Issue Rule Setting Cost-Based Rates For Baseload Plants

Hogan Lovells Cadwalader
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As detailed in a Cadwalader memorandum, the rule would amend FERC regulations to allow for the "full recovery of costs for certain eligible units" that keep a 90-day supply of fuel onsite.

United StatesEnergy and Natural Resources
Mark Haskell
Mark Haskell
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On September 28, 2017, the Department of Energy ("DOE") issued a Notice of Proposed Rulemaking ("NOPR") for the Federal Energy Regulatory Commission ("FERC") to direct regional grid operators to revise their rules to pay nuclear and coal-fired power plants for contributing to grid reliability.

As detailed in a Cadwalader memorandum, the rule would amend FERC regulations to allow for the "full recovery of costs for certain eligible units" that keep a 90-day supply of fuel onsite. To qualify, units (i) must be located within the market areas of FERC-approved regional transmission organizations ("RTOs") or independent system operators ("ISOs") and (ii) must not be subject to cost-of-service rate regulation by state or local authority. Under the proposed rule, ISOs and RTOs would file tariff amendments to establish cost-based rates for eligible power plants. The recoverable costs would include operating and fuel expenses, costs of capital and debt, and a return on

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