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America’s power markets will be wrecked by foolish subsidy for failing coal and nculear plants

Rick Perry’s new coal subsidy could wreck America’s power markets, The Hill, BY HAL HARVEY, — 10/05/17 When old, established industries are threatened by new, better technologies, they often go running to Washington for special protections. It is an old practice, generally taxing the common good for private interests. Unfortunately, the U.S. Department of Energy has set a new record for gall in this practice in a fairly stunning move that would impose a new tax on electricity consumers and roil America’s power markets for years to come.

Here’s the story: Renewable energy — especially wind and solar — has plummeted in price. Today a new wind farm, for example, is often cheaper than just the operating costs of an old coal power plant. Cheap natural gas creates additional price threats to existing coal or nuclear. And these favorable economics for renewables and gas don’t even count the public benefits they create through clean air, reduced greenhouse gas emissions and avoided fuel price spikes.

This transition motivated DOE’s recent study of grid reliability, after coal and nuclear owners warned that closing their plants and adding renewables would cause blackouts. It turns out, though, even DOE’s study found this wasn’t the case, and that clean energy works just fine on our grid.

So, across the country, in power grids where economic dispatch reigns, renewables are booming, and coal plants are shutting down. This is not a “war on coal” nor is this reality susceptible to change through political pro-coal statements. It is free-market economics, plain and simple.

What can the owners of these old power plants do? They posit changing the rules, so instead of simply being paid for electricity, they get paid for “other attributes” as well, including a novel term among utilities, “fuel-secure power plants.” The idea is that having a pile of coal next to your uneconomical power plant should be richly rewarded, bringing your 1970s technology back into the black.

At first blush, this may seem sensible. Surely having a deep inventory of on-site fuel, be it a pile of coal, nuclear fuel or water behind the dam benefits the grid? Well, it turns out that reliable power is better delivered by a diversity of sources, rather than a few huge power plants. It also turns out that wind, for example, is often more reliable than coal. ……..

Energy Secretary Rick Perry has ignored this evidence, and proposed a rule to the Federal Energy Regulatory Commission to subsidize the oldest power plants on the grid. His request is anti-innovation, anti-economy, and anti-environment. It is a wholesale repudiation of the free market. And it flatly contradicts Texas’ experience………

It’s not surprising that increasingly obsolete industries go to Washington for protection. This is an unseemly, though regular, tradition. It is outrageous, though, when the government agency charged with delivering reliable, affordable and clean electricity dispenses all these values to invent new rationales, wholly at odds with real-world experience, market forces and their own study, to protect the worst operators on the system. This is a shame at every level. http://thehill.com/opinion/energy-environment/353944-rick-perrys-new-coal-subsidy-could-wreck-americas-power-markets

October 6, 2017 Posted by Christina Macpherson | business and costs, politics, USA | Leave a comment

Keeping uncompetitive nuclear and coal plants going – is Rick Perry’s unwise energy plan

Rick Perry’s plan to subsidize coal and nuclear plants is bonkers, By keeping uncompetitive plants open, it would blow up energy markets. VOX by David Roberts@drvoxdavid@vox.com  Oct 4, 2017 The Trump administration has not typically put a premium on transparency or fealty to empirical fact. So it was somewhat puzzling when the Department of Energy released its long-awaited study of power grid reliability in August and it looked … mostly normal.

By all accounts, DOE’s experts were allowed to work on it unimpeded. Its conclusions lined up with the broad consensus in the energy field: The loss of coal plants has not diminished grid reliability; in fact, the grid is more reliable than ever. Reliability can be improved further through smart planning and a portfolio of flexible resources. Regulators should work on ways to better compensate reliability in competitive energy markets.

The summary bits of the report added a bit of political spin, but the analytic work and core conclusions were solid — and very much not in line with the administration’s position, which is that reliability is immediately threatened and coal and nuclear plants are necessary to preserve it.

Where, wondered the more cynical observers [waves], was the hackery? Where was the political interference to prop up a favored industry, the blithe disregard of expert knowledge? This is not the Trump administration we’ve come to know and … know.

Well, it turns out, we just needed a little patience. The hackery has landed. Repeat: The hackery has landed.

Unfortunately, the hackery comes obscured by a thick cloak of acronyms — it’s an NOPR from DOE about ISOs that contradicts NERC, FFS — so it takes a little unpacking.

Here’s the short summary: Perry wants utilities to pay coal and nuclear power plants for all their costs and all the power they produce, whether those plants are needed or not.

That may sound a little blunt and ridiculous to you, but don’t worry. Once you understand some of the background and the technical details, you will see that it is in fact more blunt and ridiculous than you could have imagined.

DOE has lurched, on this subject, from minimum to maximum hackery. Even in our new Trumpian world, it is astounding.

Let’s walk through it.

DOE to FERC: address a crisis we determined does not exist

Remember, the administration’s position is that, as Perry put it in his memo requesting a grid study, “regulatory burdens, as well as mandates and tax and subsidy policies, are responsible for forcing the premature retirement of baseload power plants.”

Suffice it to say, he’s not referring to the regulations, mandates, tax, and subsidy policies that benefit coal and nuclear plants. He means renewable energy subsidies, which he says “create acute and chronic problems for maintaining adequate baseload generation and have impacted reliable generators of all types.”

Putting it more explicitly, the administration’s claim is twofold: First, that power plants with large amounts of fuel on-site — coal and nuclear, basically — are necessary to grid reliability, and second, that those plants are unfairly being driven out of business by subsidies to renewable energy.

The problem is, neither claim is true, which poses something of a dilemma for Perry, who has been put in charge of an agency filled with genuine technical experts. And sure enough, DOE’s grid study found, as many other studies before it have, that a) the loss of coal and nuclear plants has not diminished reliability, and b) it is cheap natural gas, not renewable energy subsidies, that has driven coal and nuclear out of business.

Whether through ignorance or cleverness, Perry stumbled on a different communications strategy. He seems to have realized that he didn’t need to mess with the study at all. Why bother? He could simply pretend that it supported the administration’s position. The media would he-said, she-said it for a day or two and then move on. He simply behaved as though the study had confirmed his claims.

Which brings us to last Friday, when DOE proposed a new rule for the electricity system, premised on the very suppositions its own grid study disproved. To wit:

The resiliency of the nation’s electric grid is threatened by premature retirements of power plants that can withstand major fuel supply disruptions caused by natural or man-made disasters and, in those critical times, continue to provide electric energy, capacity, and essential grid reliability services. These fuel-secure resources are indispensable for the reliability and resiliency of our electric grid — and therefore indispensable for our economic and national security. It is time for the Commission to issue rules to protect the American people from energy outages expected to result from the loss of this fuel-secure generation capacity.

Again, this is all wrong. Having fuel on-site does little for resilience. The plants are not indispensable. No one expects energy outages if baseload plants continue closing.

Nonetheless, based on these faulty premises, DOE issued a Notice of Proposed Rulemaking (NOPR) to the Federal Regulatory Energy Commission (FERC), suggesting that FERC adopt a rule forcing utilities in competitive energy markets to pay the full cost of plants that have 90 days’ worth of fuel on-site.

This is a deeply messed-up thing to do, on so many levels it’s difficult to know where to begin. It is the crudest imaginable intervention on coal’s behalf.

But let’s start with a quick note on the authorities involved here.

FERC will determine the fate of this monstrosity

When Congress consolidated various agencies into DOE with the Department of Energy Organization Act of 1977, it deliberately maintained a separate regulatory authority (the Federal Power Commission, renamed FERC).

A quirk of the law allows DOE to propose rules to FERC — an authority is has used only rarely, and for fairly small matters.

But FERC is independent. It is not under DOE’s authority and does not have to do what DOE proposes.

It is highly unlikely to adopt this rule as-is. (It would effectively be impossible, for reasons we’ll discuss.) But it’s also unlikely to ignore the NOPR. These are, after all, both Trump administration agencies, run by Trump appointees.

So what exactly FERC does with the NOPR — what balance of expertise and hackery it brings to bear — will determine the actual impacts of this thing.

Now, let’s go deeper into the proposal.

Competitive energy markets work fine. Perry’s rule would lob a grenade into them……..https://www.vox.com/energy-and-environment/2017/10/4/16407278/rick-perry-doe-plan-coal-nuclear-energy-markets

October 6, 2017 Posted by Christina Macpherson | business and costs, politics, USA | Leave a comment

Energy industries unite in urging Federal Energy Regulatory Commission to reject govt support to coal, nuclear

Behind the Backlash to Energy Secretary Rick Perry’s Demand for Coal-Nuclear Market Intervention, Almost everyone outside the coal and nuclear industries wants FERC to turn down DOE’s grid market rule. Here’s why.

Greentech Media, by Jeff St. John , October 05, 2017 Energy Secretary Rick Perry’s demand for market-disrupting price supports for coal and nuclear power plants has broken multiple rules for how energy policy is made, from upending the facts to subverting regular order. And it’s being pushed through on a hyper-fast, 60-day review period that’s not only unjustified by the Department of Energy report it cites as justification, but “practically and legally impossible” to meet.

This is a collection of the critiques that have emerged since Friday’s shock DOE filing with the Federal Energy Regulatory Commission. In a rarely used notice of public rule making (NOPR), DOE asked FERC to create market rules to provide compensation for power plants that, among other features, have a 90-day supply of fuel on hand — something that only coal and nuclear power plants can do.

The NOPR cited the grid reliability study ordered by Perry in April to argue that baseload power plants need compensation to shore up grid reliability. But as we covered when it was released in July, the report doesn’t actually support that conclusion, stealing some of the thunder from clean energy and environmental groups’ arguments that the report was a Trojan horse for pro-coal and nuclear power policies all along.

Friday’s NOPR seems to have vindicated those views, however, as well as drawing the fire of a much broader coalition of energy industry players. On Tuesday, FERC received a joint motion from a coalition representing literally every sector of the energy economy except coal and nuclear power, asking it to deny DOE’s request for an interim final rule to take effect within 60 days, and to extend the comment period out to at least 90 days. ……..https://www.greentechmedia.com/articles/read/behind-the-backlash-to-energy-secretary-rick-perrys-demand-for-coal-nuclear#gs.COMQYYw

October 6, 2017 Posted by Christina Macpherson | business and costs, politics, USA | Leave a comment