The fierce pushback against U.S. Energy Secretary Rick Perry’s proposed coal and nuclear bailout continued last week with two of the country’s biggest grid operators, tech companies Microsoft and Apple, and even ExxonMobil coming out against the plan.
In late September, Perry asked the Federal Energy Regulatory Commission (FERC) to guarantee the profitability of generating facilities that keep more than 90 days of fuel onsite, prompting one critic to compare the attempt at a massive coal and nuclear bailout to “subsidizing bacon for its nutritional content”. Since then, the criticism from industry giants, including some steadfast Trump administration allies, has continued unabated.
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“I don’t know how this proposal could be implemented without a detrimental impact on the market,” said Andrew Ott, CEO of PJM Interconnection LLC, the country’s biggest independent grid operator. According to the Cleveland Plain-Dealer, Ott said the “federal proposal to subsidize the owners of old nuclear and coal plants is unworkable and would not even be legal”. Bloomberg notes that “the plan has drawn ire from a wide coalition of natural gas producers, renewable energy generators, and public utilities, which argue that such an approach would distort markets, inhibit competition, and raise consumer prices,” prompting the Washington Post to describe the opposition as a coalition of strange bedfellows.
“This is the first time we’ve filed a motion in conjunction” with the American Petroleum Institute, acknowledged Gil Jenkins, spokesperson for the American Council On Renewable Energy. “It’s unprecedented. Just as this very action taken by DOE.”
The purpose of Perry’s proposal was to help aging coal and nuclear plants “compete with new ultra-efficient gas turbine power plants—which are about twice as efficient—but which rely on pipeline gas rather than fuel onsite,” the Plain Dealer notes. “In other words, the DOE wants PJM’s fiercely competitive markets to accept higher-priced power from old coal and nuclear plants at whatever it cost to generate—plus a profit—the way the old plants did business before deregulation.”
The paper might also have pointed to tough competition from increasingly affordable and popular solar, wind, energy efficiency, and energy storage systems.
But the plan isn’t sitting at all well with regional transmission organizations that have been working in a more competitive market for the last couple of decades. Bloomberg notes that the comments from PJM’s Ott “echo concerns raised by other grid operators, which on Monday asked the commission to reject Perry’s proposal. The New York Independent System Operator, ISO New England, and the Midcontinent Independent System Operator filed comments jointly with a coalition of organizations that wouldn’t be affected,” including the Electric Reliability Council of Texas (ERCOT), the California Independent System Operator (CISO), and the Southwest Power Pool.
“The proposal threatens to undermine price formation and competition in the nation’s organized electricity markets,” they said, adding that the plan would undermine grid reliability rather than supporting it.
While the Plain Dealer says Perry designed the plan at the behest of traditional utility companies like Ohio-based FirstEnergy, the Pittsburgh Post-Gazette reported last week that the troubled power producer, currently in restructuring talks with its major creditors, will dump its coal and nuclear plants regardless.
“I want to be very clear,” CEO Chuck Jones said Friday. “We have no interest in maintaining generating assets that have commodity exposure, and we’re moving forward with exiting the commodity-exposed business.” He added that “I don’t think the DOE initiative has anything to do with FirstEnergy, despite what’s been reported in some of the media”—which the Post-Gazette interpreted as a reference to Murray Energy CEO Bob Murray’s recent, unsuccessful plea to the White House for emergency relief for FirstEnergy coal plants.
Beyond the utility sector, the Financial Times [subs req’d] lists Microsoft, Walmart, ExxonMobil, General Electric, and Apple among the 680 intervenors—from Exxon to online craft retailer Etsy—that expressed their opposition to the Perry plan as the initial deadline for comments passed last week. Bloomberg says Exxon, Anadarko Petroleum Corporation, and Devon Energy Corporation all “stressed the reliability and low cost of natural gas, while the Solar Energy Industries Association warned that coal and nuclear plants are not immune to unexpected outages.”
The Times notes that “about 43 gigawatts of coal-fired generation capacity was retired in the U.S. between 2012 and 2016, to be replaced by 40 GW of gas-fired plants, 56 GW of wind and solar capacity, and just 4.7 GW of new coal plants. Five nuclear plants have shut since 2013, with about 5 GW of capacity.”
