By: Timothy Cama |
Energy Secretary Rick Perry is making waves through Washington and the energy world with his unprecedented proposal to prop up coal and nuclear power plants that are at risk of closing.
Experts say Perry’s proposal marks the most significant change to the country’s power markets in decades — a polar contrast to the market-based approach the Federal Energy Regulatory Commission (FERC) had been taking.
It correlates with President Trump’s promise to save the coal industry and the administration’s argument that a rash of coal and nuclear plant closings is threatening the electric grid.
Perry wants to increase the payments to troubled coal and nuclear plants by requiring that certain regional electric grid operations pay power plants their actual costs of operating plus a “fair rate of return.”
It would be a significant shift from the bidding process now allowed and would almost certainly raise electricity costs for consumers, critics say of the plan.
But Perry’s idea has garnered significant praise from coal and nuclear industry leaders, who say it could revive plants they say deserve to be paid more.
They argue that because these plants build up larger fuel supplies than competitors producing electricity from wind and solar power, they should be paid more.
“We commend Secretary Perry for initiating a rulemaking by FERC that will finally value the on-site fuel security provided by the coal fleet,” said Paul Bailey, president of the American Coalition for Clean Coal Electricity.
“The coal fleet has large stockpiles of coal that help to ensure grid resilience and reliability,” he said.
The renewable power industry disagrees.
Along with environmentalists and grid experts, they say Perry’s proposal, which would require FERC approval to go into effect, is a poor excuse to abide by Trump’s campaign promises.
“It suggests that, somehow, there’s something categorically different about that kind of technology than other technology on the grid,” said Sue Tierney, an energy expert at the Analysis Group who was an assistant secretary of Energy under former President Clinton.
The proposal also divided the natural gas industry from coal and nuclear, even though it often sided with its rivals to oppose Obama administration climate policies.
Since gas plants usually get their fuel from pipelines and do not store it at the plants, they would not be eligible for incentives that could be doled out to the nuclear and coal industries.
“We are concerned the agency has mischaracterized the lessons learned from past weather-related events and appears to suggest that additional regulation is the answer where markets have already proven the ability to greatly benefit consumers and give our electric system the flexibility needed to meet constantly, and often rapidly, changing electricity demands,” said Marty Durbin, chief strategy officer at the American Petroleum Institute, which represents the natural gas industry’s interests.
At the heart of the debate is whether plant retirements are making the grid less resilient — and whether coal and nuclear power are the answer. Critics cite recent reports from the North American Electric Reliability Corporation, the National Academies of Science and elsewhere to argue that the plant closure problem is overblown.
