Energy industry coalition criticizes US administration over coal, nuclear subsidization plan
A coalition of energy advocates from natural gas, oil, storage, solar and wind sources have denounced a Trump Administration order to U.S. Energy Secretary Rick Perry to prepare a plan to bail out coal and nuclear plants throughout the United States.
A draft memo of the plan calls for the subsidization of failing coal and nuclear plants, under the argument that, while lost megawatts of power are often replaced by natural gas and renewable energy sources, “this transition comes at the expense of fuel security and resilience.” It states, therefore, that because the causes are regulatory and economic, the government has the right and incentive to intervene.
A joint statement from a group of 10 energy industry stakeholders criticized the government’s draft plan as legally indefensible, and one which would force consumers to pay more.
“The Administration’s plan to alter competitive electricity market outcomes through the use of narrow emergency authorities crafted by Congress to protect the nation from true imminent threats to electric reliability is wholly unprecedented and legally indefensible,” Malcolm Woolf, Advanced Energy Economy senior vice president of policy, said.
“It would be a command-and-control mechanism that fundamentally disrupts and undermines the competitive electricity markets that have improved our electricity system’s reliability, resilience, and affordability, while fostering innovation. As has been well established – by FERC, by grid operators, by industry experts – there is no emergency that would justify propping up uneconomic power plants that are superfluous in an over-supplied region,” he added.
Woolf was backed in this by groups including the American Wind Energy Association (AWEA), the American Petroleum Institute (API), the American Council on Renewable Energy (ACORE), Business Council for Sustainable Energy, Electricity Consumers Resources Council (ELCON), Electric Power Supply Association (EPSA), Energy Storage Association (ESA), Natural Gas Supply Association (NGSA) and Solar Energy Industries Association (SEIA).
A trade association representing the oil and gas industry said the administration’s plan to provide government assistance to unprofitable coal and nuclear power plants for national security reasons would be misguided.
“As the world’s largest producer and refiner of oil and natural gas, which today is the number one source of U.S. electricity, our nation is on track to achieve the President’s vision for energy dominance,” Todd Snitchler, market development group director for API, said. “However, unprecedented government intervention in the energy markets to support high cost generation will put achieving that vision in jeopardy and hurt customers by taking more money out of their pockets rather than letting people keep more of what they earn – a key priority of this administration.”
These groups argue that manufacturing jobs would be lost under this plan, prices would rise, and competition would be eroded. They have denounced it as short-sighted economically, with the potential to set the U.S. back significantly. As a plan, it would also could set a precedent for future administrations that would make business models a nightmare to pursue.
“This proposed federal action is a bell that cannot be called back once it is rung,” John Shelk, president and CEO of EPSA, said. “Forever more suppliers and consumers will be at the whim of the fuel preferences of whoever happens to be in office. This needlessly raises costs for consumers and merely shifts the risk of premature retirement to newer, more efficient power plants that compete with coal and nuclear.”
Kelly Speakes-Backman, CEO of ESA, noted that the Energy Storage Association advocates for open and fair competition for all market participants. “Any action that undermines market stability to support new entrants like energy storage – resources that enhance grid resilience and reduce costs to consumers – will erode opportunities to create a more reliable and resilient, efficient, sustainable and affordable grid,” she said.
The pleas of the industry have been echoed by the attorneys general of nine states, who wrote to Perry last month urging him to avoid intervention.
PJM Interconnection, a regional transmission organization, said last week that its analysis of planned deactivations of nuclear plants showed that there is no immediate threat to system reliability.
“Any federal intervention in the market to order customers to buy electricity from specific power plants would be damaging to the markets and therefore costly to consumers,” PJM said.
