FERC Appointees Unanimously Reject Trump Coal/Nuclear Bailout
The Republican-dominated Federal Energy Regulatory Commission (FERC) dealt the pro-coal Trump administration a stinging defeat Monday when it unanimously rejected a thinly-veiled plan to subsidize money-losing American power plants still burning the dirtiest of all fossil fuels.
“This is really FERC saying that any change we make to the grid is going to be grounded in fact,” said Greg Wetstone, President of the American Council On Renewable Energy. “This is shifting to a real-world process based on what’s actually happening to the nation’s grid, and that’s great news for renewable energy.”
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U.S. Energy Secretary Rick Perry proposed the bailout plan last September, asking FERC to set an arbitrary price incentive for power plants that keep at least 90 days of fuel supply on hand. The qualifier effectively limited the proposed subsidy to coal and nuclear generators—both of which have been struggling to stay solvent against competition from renewables and natural gas.
Perry cast the subsidy as necessary to maintain the resilience of American’s power supply against interruption. As coal plants shut down, the former Texas governor asserted, U.S. “states and regions are accepting increased risks that could affect the future reliability and resilience of electricity delivery.”
That premise was roundly and repeatedly rubbished by more knowledgeable experts. It was undercut again last week when cold weather forced two nuclear stations in the U.S. Northeast—pillars of grid reliability in Perry’s alternate universe—to close down. Other unplanned outages reaching from the District of Columbia to Chicago were blamed on utilities’ inability to break up coal frozen in piles in order to feed steam boiler furnaces.
Perry’s own department contradicted him when two national DOE laboratories confirmed that “low natural gas prices, not high renewable energy penetrations, are the main cause of low and negative electricity prices that are negatively impacting coal and nuclear operators,” Utility Dive reported last week.
Then on Monday FERC’s five commissioners—three of them Republicans, and four appointed by Trump—sided with Perry’s many critics, unanimously rejecting his coal subsidy pitch.
“[T]he Proposed Rule would allow all eligible resources to receive a cost-of-service rate regardless of need or cost to the system. The record, however, does not demonstrate that such an outcome would be just and reasonable,” the commissioners’ order asserted.
“While some commenters allege grid resilience or reliability issues due to potential retirements of particular resources,” the FERC decision said, “we find that these assertions do not demonstrate the unjustness or unreasonableness of the existing tariffs. In addition, extensive comments submitted by [transmission grid operators and supply utilities] do not point to any past or planned generator retirements that may be a threat to grid resilience.”
At the same time, however, the commission said it shared Perry’s goal of strengthening the resilience of the American grid. Its order “directed regional transmission operators to provide information to help the commission examine the matter ‘holistically’,” the Post notes. FERC asked for comments to be filed within 60 days, after which it may “issue another order” regarding struggling coal and nuclear providers.
“Although the FERC could issue a new order after submissions by regional grid operators,” the Washington news outlet observes, “the language in the current order suggested it would stand by free competitive electricity markets.”
Ostensibly designed to support grid reliability, the requested subsidy was instead “widely seen as an effort to alter the balance of competitive electricity markets,” the Post states. “It would have largely helped a handful of coal and nuclear companies, including the utility FirstEnergy and coal mining firm Murray Energy, while raising rates for consumers.”
Murray Energy Chair Robert Murray, an outspoken Trump supporter, has called for relief for his industry as a price for that support. (Murray has also sued TV personality and comic John Oliver for calling him “a geriatric Dr. Evil.”)
Similarly, while Republican FERC Chair Neil Chatterjee applauded Perry for his “bold leadership in jump-starting a national conversation on this urgent challenge,” and worried about the “many nuclear and coal units at risk of economic retirement,” most analysts “saw the decision as a setback for the administration,” the Post notes.
Billionaire former New York mayor and climate hawk Michael Bloomberg welcomed the demise of what he called “a truly terrible idea that united conservative and liberal leaders in opposition,” according to Politico’s daily Morning Energy blog.
The Nuclear Energy Institute’s Maria Korsnick, Politico ME notes, “sought a silver lining” in FERC’s call for more data from grid operators. Korsnick urged them to take “prompt and meaningful action” on the request, “including on issues such as price formation.”
But the ruling illustrated how limited are the tools available to the Trump administration in its desire to restore lustre and profitability to the beleaguered coal business.
“The forces that are driving the changes under way in the industry are so powerful, animated by economic and technological changes and preferences,” energy analyst Susan Tierney, a former official in the Obama administration, told E&E News [subs req’d]. “I think those are going to continue.”
Coincidentally, just days before its decision, FERC had reported that U.S. utilities will retire a net 18 gigawatts of coal-fired generation between now and the end of Donald Trump’s term of office [though that assumes a full four-year term—Ed.]. More than six times that much renewable capacity will enter the American grid over the same period.
FERC’s November Energy Infrastructure Update predicted utilities will commission 2 GW of new coal-fired generation in the United States between now and 2020, Utility Dive reports. But more than 20 GW of coal capacity will be shuttered.
Meanwhile, “more than 72 GW of new wind generation will come online and 43.5 GW of solar is expected as well,” the industry newsletter notes.