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US Energy scheme would aid coal, nuclear interests

BY JAMES SPENCER AND GREG WETSONE / Published: November 5, 2017

Secretary of Energy Rick Perry recently proposed that the Federal Energy Regulatory Commission intervene in state electricity markets to establish new rules that would force electricity consumers to subsidize uneconomical coal and nuclear power plants.

The proposal is theoretically intended to promote “resiliency” of the electrical grid, but it is a thinly disguised effort to help politically connected interests at the expense of electricity ratepayers.

In its proposal, the Department of Energy gave FERC only 60 days to decide whether to upend the nation’s electricity markets. If FERC decides to enact the government’s proposal, it would undermine 25 years of progress in the development of competitive electricity markets that save consumers money. As the federal government intervenes to pick winners and losers, it undermines the growth of two thriving industries that have been huge drivers for economic growth both in Pennsylvania and across America — renewable energy and natural gas.

The energy department’s recent study of the nation’s grid undermines the notion that we need this new government intervention to address concerns about resilience.

The study failed to document any way that either coal or nuclear power could help. In fact, in extreme circumstances where the grid has been tested, the on-site coal and nuclear fuel that the department now says is necessary has proved to be a vulnerability. During the 2014 polar vortex, coal piles froze. During Hurricane Harvey, coal units went down in the Houston, Texas, area due to flooding. Tsunami floods in 2011 led to the shutdown of the Fukushima nuclear plant in Japan and the release of dangerous radiation. Facilities that require continuous access to cooling water to avert catastrophic accidents are not resilient to stress.

There is no evidence that on-site fuel supply, as called for by the energy department, will reduce electricity outages. A recent study by the Rhodium Group, a New York economic analysis agency, concluded that less than .00007 percent of power outages are related to fuel supply issues. In those rare cases in which fuel supply has been an issue, it has been at coal plants.

The department’s proposal seeks to override state authority by imposing a guaranteed cost recovery mechanism for existing and potentially new coal and nuclear units. Every eligible unit would receive full cost recovery whether it is needed by the system operator or wanted by customers. That means consumers would be saddled with billions of dollars in unnecessary electricity charges.

Fortune 500 companies and small businesses choose the kind of electricity they want to meet requirements for energy, lower costs, critical functions and sustainability. If finalized, this rule would force businesses to pay more for power they don’t want.

The decision on whether to upend the current electricity marketplace with new subsidies for coal and nuclear power will ultimately rest with FERC, which has a majority of Trump administration appointees, none of whom in the past have supported this sort of interference in state and regional electricity markets.

A broad coalition stands together in support of a competitive electricity marketplace, including groups as diverse as the American Petroleum Institute and the American Council on Renewable Energy. It is our hope that the bipartisan commissioners at FERC will rule against this heavy-handed distortion of the electricity marketplace, and avoid new bureaucratic initiatives that increase prices.


November 5, 2017 - Posted by | Uncategorized

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