OPED: Energy plan could cost billions
A few weeks ago, Secretary of Energy Rick Perry proposed that the Federal Energy Regulatory Commission (FERC), intervene in state electricity markets to establish new rules that would have electricity consumers 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 (DOE) gives FERC only 60 days to decide whether to upend the nation’s electricity markets. If FERC decides to enact the DOE 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 notion that we need this new government intervention to address concerns about resilience is undermined by DOE’s own recent study of the nation’s grid. The study failed to document any serious problem 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 DOE now says is necessary has proven 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 force floods also led to the shut-down of the Fukushima nuclear plant in Japan and the release of dangerous radiation. Facilities that require continuous access to cooling water to avert catastrophic accident are not resilient to stress.
There is also no evidence that on-site fuel supply, as called for by DOE, will reduce electricity outages. A recent study by the Rhodium Group concluded that less than .00007 percent of power outages are related to fuel supply issues. In those rare cases where fuel supply has been an issue, it has been at coal plants.
DOE’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 electricity consumers would be saddled with billions of dollars in unnecessary charges.
Fortune 500 companies and small businesses are choosing 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 the 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 is standing together in support of a competitive electricity marketplace, including such diverse groups as the American Petroleum Institute and the American Council on Renewable Energy. It is our hope that the bipartisan collection of commissioners at FERC will rule against this heavy-handed distortion of the electricity marketplace, and avoid new bureaucratic initiatives that increase power prices.
— James Spencer is the president & CEO of EverPower, a Pittsburgh-based developer, owner, and operator of utility scale wind projects in the U.S.
— Greg Wetstone is the president and CEO of the American Council on Renewable Energy, a national nonprofit organization dedicated to advancing renewable energy through finance, policy and market development.