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USA’s Federal Energy Regulatory Commission makes a fact-based decision against subsidies for coal and nuclear power

Rejection of subsidies for coal and nuclear power is a win for fact-basedpolicymakingEllen Hughes-Cromwick, Senior Economist and Interim Associate Director of Social Science and Policy, University of Michigan Energy Institute, University of Michigan  Energy Secretary Rick Perry has repeatedly expressed concern over the past year about the reliability of our national electric power grid. On Sept. 28, 2017, Perry ordered the Federal Energy Regulatory Commission to revise wholesale electricity market rules to help ensure “… a reliable, resilient electric grid powered by an ‘all of the above’ mix of generation resources.” Perry’s proposal included an implicit subsidy to owners of coal and nuclear power plants, to compensate them for keeping a 90-day fuel supply on-site in the event of a disruption to the grid.

On Jan. 8, FERC issued a statement, supported by all five commissioners, terminating Perry’s proposal. The commissioners held that paying generators to store fuel on-site would only benefit some fuel types. And although coal and nuclear plants are retiring in large numbers, commissioners were not persuaded that this was due to unfair pricing in power markets.

In my view, FERC made an appropriate and well-grounded decision. The commission opted to gather more information and examine many possible approaches to improving reliability, instead of rubber-stamping a directive that had not been fully vetted. The commission’s action is a good example of the kind of evidence-based policymaking that Americans should expect from the federal government………

Look at the evidence

Whether FERC commissioners know it or not, their approach follows many recommendations set forth recently by a national Commission on Evidence-Based Policymaking. This panel was created in 2016 through legislation co-sponsored by House Speaker Paul Ryan and Senator Patty Murray of Washington. Its task was to examine how federal agencies use data, research and evaluation to build evidence, and to strengthen those efforts in order to make better policies……..

FERC’s 5-0 decision shows that the commissioners agreed on their course, and it appears that policymaking based on evidence won the day. This decision had the potential to affect millions of electricity customers, as well as power markets and the environment. FERC deserves congratulations for putting evidence before action. https://theconversation.com/rejection-of-subsidies-for-coal-and-nuclear-power-is-a-win-for-fact-based-policymaking-88832

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January 12, 2018 - Posted by | politics, USA

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