Former Kentucky Public Service Commission Chair Kent Chandler has raised concerns about a recent Department of Energy (DOE) report on resource adequacy, saying it relies on a single scenario with limited supply growth to argue against retiring power plants. Chandler, now a senior fellow at the R Street Institute, stated in an interview, “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 noted that most studies examining future resource adequacy would use multiple scenarios and assess the probability of each occurring. However, he said the DOE’s report does not take this approach.
He referenced Kentucky’s establishment of a board tasked with reviewing proposed plant retirements and making recommendations to the Public Service Commission (PSC). The board recently made no recommendation after a cooperative sought to retire a small combustion turbine plant that was more expensive to repair than replace. “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.’”
Chandler continued: “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 added that decisions might differ if larger facilities were involved; for example, retiring a 650-MW plant would significantly affect regional resources.
The DOE has historically used Section 202(c) in specific cases when grid reliability is threatened and environmental regulations limit plant operations. This provision ensures power plants will not face penalties for exceeding emissions limits during emergencies.
To address political issues around plant retirements and reliability concerns, Chandler suggested expanding how regional transmission organizations (RTOs) and independent system operators (ISOs) use reliability must-run (RMR) contracts. While these contracts are typically used as temporary solutions by most grid operators when removing a retiring plant could cause problems, Chandler pointed out that ERCOT employs RMRs as part of its regular approach after demonstrating necessity.
Chandler believes Congress or possibly FERC could revise rules so RTOs and ISOs can better evaluate how retirements impact resource adequacy and apply RMRs when appropriate.
