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US FERC rejects Perry’s plan to subsidise coal-fired plants
- 6 years ago (2018-01-09)
- David Flin
The Trump Administration’s plan to bail out America’s coal industry has crumbled after the Federal Energy Regulatory Commission (FERC) rejected the proposal from Rick Perry, US Energy Secretary, to subsidise struggling coal and nuclear plants to keep power grids dependable. FERC has instead asked grid operators to put forward their own proposals to make the grid system more resilient.
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FERC said: “We appreciate the Secretary reinforcing the resilience of the bulk power system as an important issue that warrants further attention.” Three of the five commissioners of FERC were appointed by President Trump.
The plan put forward by Perry had been criticised by natural gas producers, grid operators, and others who argued that it would undermine competition in wholesale power markets.
Perry said in a statement: “As intended, my proposal initiated a national debate on the resiliency of our electric system. What is not debatable is that a diverse fuel supply, especially with on-site fuel capability, plays an essential role in providing Americans with reliable, resilient, and affordable electricity, particularly in times of weather-related stress like we are seeing now.”
Perry had ordered FERC to consider the plan in September, to pay plants a premium to store at least 90 days of fuel on site in an effort to make grids more reliable. The payments would have bolstered the economics for coal and nuclear generators, who have seen both their profits and market share squeezed by gas and renewables.
FERC said on 8 January that Perry’s plan did not pass legal muster. The order gave regional grid operators 60 days to submit feedback on how grid resilience should be assessed, and whether the Commission should take any action at this time. Commissioner Richard Glick said: “There is unanimous agreement at the Commission that the DOE proposal wasn’t sufficient.”
Perry had repeatedly said that storing fuel on site makes coal and nuclear plants less prone to shutdowns. An Energy Department study didn’t support that claim, finding instead: “Attempts to achieve fuel diversity in market designs explicitly would likely result in inefficient and potentially discriminatory practices that are inconsistent with the Federal Power Act.”
Grid operators and utilities also rejected Perry’s claim, contending that resilience has more to do with the resilience of the grid network than about fuel supply.