WASHINGTON — Federal regulators on Monday rejected a proposal by Energy Secretary Rick Perry to subsidize struggling coal and nuclear plants, in a major blow to the Trump administration’s efforts to revive America’s declining coal industry.
Over the past decade, an influx of cheap natural gas and the rapid rise of renewable energy have transformed the nation’s power sector, driving down wholesale electricity prices and pushing many older coal and nuclear plants into unprofitability and retirement.
In September, Mr. Perry warned that the loss of these plants could threaten the “reliability and resiliency of our nation’s grid” and asked the Federal Energy Regulatory Commission, which oversees regional electricity markets, to guarantee financial returns for power plants that can stockpile at least 90 days’ worth of fuel on-site — which, in effect, meant propping up uncompetitive coal and nuclear units. (Natural gas plants are typically fed by pipeline and would not qualify.)
While a few utilities with significant coal and nuclear capacity supported the idea, Mr. Perry’s proposal generated a fierce backlash from a broad coalition of energy companies, free-market groups and former regulators.
Critics argued that Mr. Perry’s proposal would upend competition in the nation’s electricity markets, which have been deregulated in much of the country since the 1990s and currently tend to favor the lowest-cost sources of power.
Opponents of Mr. Perry’s proposal also pointed out that blackouts usually occurred because of problems with transmission lines — not because power plants had insufficient fuel on site.
In its decision, the commission largely sided with the critics, noting that grid operators have so far proven adept at keeping the lights on even as natural gas, wind and solar have crowded out baseload coal and nuclear plants, which were once favored by utilities because they can reliably generate power at all hours of the day.
“There is no evidence in the record to suggest that temporarily delaying the retirement of uncompetitive coal and nuclear generators would meaningfully improve the resilience of the grid,” wrote Commissioner Richard Glick, concurring with the agency’s decision to reject the proposal. “Rather, the record demonstrates that, if a threat to grid resilience exists, the threat lies mostly with the transmission and distribution systems, where virtually all significant disruptions occur.”
Over the past decade, an influx of cheap natural gas and the rapid rise of renewable energy have transformed the nation’s power sector, driving down wholesale electricity prices and pushing many older coal and nuclear plants into unprofitability and retirement.
In September, Mr. Perry warned that the loss of these plants could threaten the “reliability and resiliency of our nation’s grid” and asked the Federal Energy Regulatory Commission, which oversees regional electricity markets, to guarantee financial returns for power plants that can stockpile at least 90 days’ worth of fuel on-site — which, in effect, meant propping up uncompetitive coal and nuclear units. (Natural gas plants are typically fed by pipeline and would not qualify.)
While a few utilities with significant coal and nuclear capacity supported the idea, Mr. Perry’s proposal generated a fierce backlash from a broad coalition of energy companies, free-market groups and former regulators.
Critics argued that Mr. Perry’s proposal would upend competition in the nation’s electricity markets, which have been deregulated in much of the country since the 1990s and currently tend to favor the lowest-cost sources of power.
Opponents of Mr. Perry’s proposal also pointed out that blackouts usually occurred because of problems with transmission lines — not because power plants had insufficient fuel on site.
In its decision, the commission largely sided with the critics, noting that grid operators have so far proven adept at keeping the lights on even as natural gas, wind and solar have crowded out baseload coal and nuclear plants, which were once favored by utilities because they can reliably generate power at all hours of the day.
“There is no evidence in the record to suggest that temporarily delaying the retirement of uncompetitive coal and nuclear generators would meaningfully improve the resilience of the grid,” wrote Commissioner Richard Glick, concurring with the agency’s decision to reject the proposal. “Rather, the record demonstrates that, if a threat to grid resilience exists, the threat lies mostly with the transmission and distribution systems, where virtually all significant disruptions occur.”
