Direct Energy just released an informative post about an order issued by the U.S. Department of Energy. The order would “require the Federal Energy Regulatory Commission (FERC) to issue a final rule requiring ‘fair and full compensation’ for baseload power plants, such as coal and nuclear”.

What does the order actually mean?

It means plants with 90 days’ worth of on-site fuel would be “guaranteed  ‘full recovery of costs’ and a ‘fair rate of return’”. This largely applies to coal, nuclear and hydroelectric plants.

What’s the DOE’s justification?

The Department of Energy suggests this order will aide with “grid reliability and resiliency” but Direct Energy seems to show some skepticism:

Direct Energy Business is focused on ensuring that the final rules are in the best interest of our customers–and that our customers can continue to design their energy future.  Any requirement to pay for old or obsolete power plants should be viewed with a skeptical eye, as this likely will not help efforts to build new infrastructure or help customers meet their unique energy needs.

As of writing this, the timeline is still somewhat unclear According to Direct Energy, there’s significant pressure to delay the process.

No doubt this controversial issue will be a discussion piece for a long time. As energy brokers, you should keep an eye out for how this may impact your pricing.